<PAGE>
As filed with the Securities and Exchange Registration Nos. 2-70162
Commission on December 1, 1995 1995811-3121
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 15 /X/
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 16 /X/
FBL MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
5400 University Avenue (515) 225-5586
West Des Moines, Iowa 50266 (Registrant's Telephone
(Address of Principal Executive Number, including
Offices) (Zip Code) Area Code)
Stephen M. Morain, Esquire Copy to:
5400 University Avenue Charles F. Custer, Esquire
West Des Moines, Iowa 50266 Vedder, Price, Kaufman & Kammholz
(Name and Address of Agent 222 North LaSalle Street
for Service) Chicago, IL 60601
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has registered an indefinite amount of shares under the Securities Act of 1933.
The Rule 24f-2 Notice for the year ended July 31, 1995 was filed with the
Securities and Exchange Commission on or about September 26, 1995.
It is proposed that this filing will become effective (check appropriate box)
/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
____________________
<PAGE>
FBL MONEY MARKET FUND, INC.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
N-1A
<TABLE>
<CAPTION>
ITEM NO. CAPTION
- -------- -------
<S> <C> <C>
PART A INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Condensed Financial Information;
Yield Information
4. General Description of Registrant Investment Objective and Policies;
Investment Restrictions;
General Information
5. Management of the Fund Management of the Fund;
Portfolio Transactions
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other Securities Taxes; Dividends;
General Information
7. Purchase of Securities Being Offered Management of the Fund;
How to Buy Shares; Net Asset
Value; Other Shareholder
Services
8. Redemption or Repurchase How to Redeem Shares; Other
Shareholder Services
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET -- Continued
<TABLE>
<CAPTION>
ITEM NO. CAPTION
- -------- -------
<S> <C> <C>
PART B INFORMATION REQUIRED IN STATEMENT
OF ADDITIONAL INFORMATION
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Restrictions;
Investment Objective
and Policies
14. Management of the Fund Officers and Directors
15. Control Persons and Principal Officers and Directors
Holders of Securities
16. Investment Advisory and Other Investment Adviser and Manager;
Services Officers and Directors; Underwriting and
Distribution Expense; Other Information
17. Brokerage Allocation and Other Practices Investment Adviser
18. Capital Stock and Other Securities Not Applicable (see Part A)
19. Purchase, Redemption and Net Asset Value; Retirement Plans;
Pricing of Securities Being Redemptions
Offered
20. Tax Status Not Applicable (see Part A)
21. Underwriters Underwriting and Distribution
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ITEM NO. CAPTION
- -------- -------
<S> <C> <C>
22. Calculation of Performance Data Calculation of Fund's Yield
23. Financial Statements Financial Statements
</TABLE>
iii
<PAGE>
[LOGO]
FARM BUREAU MUTUAL FUNDS
5400 University Avenue, West Des Moines, Iowa 50266
Yield and Purchase Information --
Call Toll Free (800) 247-4170 or in Iowa call Toll Free (800) 422-3175; in the
Des Moines metropolitan area call 225-5586.
- -------------------------------------------
TABLE OF CONTENTS Page No.
Summary of Expenses............................................................2
Condensed Financial Information................................................3
Yield Information..............................................................4
Investment Objective and Policies..............................................4
How to Buy Shares..............................................................8
How to Redeem Shares...........................................................9
Other Shareholder Services....................................................10
Net Asset Value...............................................................12
Management of the Fund........................................................12
Portfolio Transactions........................................................13
Dividends.....................................................................13
Taxes.........................................................................14
General Information...........................................................14
- -------------------------------------------
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER, OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OF THE FUND IN ANY JURISDICTION IN WHICH SUCH SALE, OFFER
TO SELL, OR SOLICITATION MAY NOT BE LAWFULLY MADE.
- ------------------------------------------------
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
FBL
MONEY MARKET
FUND, INC.
Prospectus dated December 1, 1995
FBL Money Market Fund, Inc. (the "Fund") is a no-load, open-end, diversified
management investment company with an investment objective of maximum current
income consistent with liquidity and stability of principal. The Fund pursues
its objective by investing in money market instruments maturing in thirteen
months or less, including securities issued or guaranteed by the United States
Government, its agencies or instrumentalities, certificates of deposit, bankers'
acceptances, high grade commercial paper and other corporate debt and repurchase
agreements. There can be no assurance that the objective of the Fund will be
realized.
Shares of the Fund may be purchased at their net asset value without any sales
charge. The minimum initial investment is $500 and subsequent investments may be
made in any amount. Shares may be redeemed at any time at net asset value as
described herein.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus contains information about the Fund that a prospective
investor should know before investing. Please read it carefully and retain it
for future reference. A Statement of Additional Information for the Fund, dated
December 1, 1995, has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. The Statement of Additional Information is
available upon request and without charge from the Fund by writing or calling
the Fund at the address or telephone numbers set forth above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF
EXPENSES
- ---------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases....................................... None
Maximum Sales Load Imposed on Reinvested Dividends............................ None
Deferred Sales Load........................................................... None
Redemption Fee................................................................ None
Exchange Fee.................................................................. None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of net assets)
Management Fees............................................................... 0.50%
12b-1 Fees.................................................................... None
Other Expenses................................................................ 1.01%
---------
Total Fund Operating Expenses......................................... 1.51%
---------
---------
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:..... $ 15 $ 48 $ 82 $ 180
</TABLE>
The purpose of the preceding table is to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown. The
example assumes a 5% annual rate of return pursuant to the requirements of the
Securities and Exchange Commission and is not intended to be representative of
past or future performance of the Fund.
2
<PAGE>
- --------------------------------------------------------------------------------
CONDENSED
FINANCIAL
INFORMATION
---------------
The condensed financial information set forth below has been derived from
the financial statements and financial highlights of the Fund, which have been
audited by independent auditors. This table should be read in conjunction with
the financial statements and notes thereto of the Fund included in the Annual
Report to Shareholders, which financial statements and notes are incorporated
herein by reference.
Selected data for a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income From Investment
Operations
Net investment income.... 0.041 0.020 0.019 0.036 0.064 0.077 0.083 0.061 0.052
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations................ 0.041 0.020 0.019 0.036 0.064 0.077 0.083 0.061 0.052
Less Distributions
Dividends (from net
investment income)...... (0.041) (0.020) (0.019) (0.036) (0.064) (0.077) (0.083) (0.061) (0.052)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions........ (0.041) (0.020) (0.019) (0.036) (0.064) (0.077) (0.083) (0.061) (0.052)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
year....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Return:
Total investment return
based on net asset value
(1)....................... 4.17% 1.95% 1.91% 3.69% 6.59% 7.92% 8.57% 6.23% 5.38%
Ratios/Supplemental Data:
Net assets, end of year
(000's omitted)........... $ 19,977 $ 18,927 $ 22,072 $ 33,511 $ 61,876 $ 67,784 $ 54,116 $ 23,868 $ 22,966
Ratio of net expenses to
average net assets........ 1.51% 1.50% 1.50% 1.25% 0.93% 0.93% 1.09% 1.15% 1.16%
Ratio of net income to
average net assets........ 4.06% 1.92% 1.89% 3.75% 6.40% 7.52% 8.58% 6.10% 5.26%
Information assuming no
voluntary reimbursement by
FBL Investment Advisory
Services, Inc. of excess
operating expenses:
Per share net investment
income.................. $ 0.036 $ 0.019 $ 0.019
Ratio of expenses to
average net assets...... 2.01% 1.57% 1.54%
Amount reimbursed........ $ 96,398 $ 6,978 $ 5,116
<CAPTION>
1986
---------
<S> <C>
Net asset value, beginning of
year....................... $ 1.000
Income From Investment
Operations
Net investment income.... 0.063
---------
Total from investment
operations................ 0.063
Less Distributions
Dividends (from net
investment income)...... (0.063)
---------
Total distributions........ (0.063)
---------
Net asset value, end of
year....................... $ 1.000
---------
---------
Total Return:
Total investment return
based on net asset value
(1)....................... 6.50%
Ratios/Supplemental Data:
Net assets, end of year
(000's omitted)........... $ 23,561
Ratio of net expenses to
average net assets........ 1.32%
Ratio of net income to
average net assets........ 6.33%
Information assuming no
voluntary reimbursement by
FBL Investment Advisory
Services, Inc. of excess
operating expenses:
Per share net investment
income..................
Ratio of expenses to
average net assets......
Amount reimbursed........
</TABLE>
- ------------
Note: Per share amounts have been calculated on the basis of monthly per share
amounts (using average monthly outstanding shares) accumulated for the
period.
(1) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the year, reinvestment of all
dividends and distributions at net asset value during the year, and
redemption on the last day of the year.
3
<PAGE>
- --------------------------------------------------------------------------------
YIELD
INFORMATION
- ---------------
From time to time, the Fund may advertise its yield and effective yield.
Each figure is based upon historical earnings and is not necessarily
representative of the future performance of the Fund. The yield of the Fund
refers to the net investment income generated by a hypothetical investment in
the Fund over a specific seven-day period. This net investment income is then
annualized, which means that the net investment income generated during the
seven-day period is assumed to be generated each week over an annual period and
is shown as a percentage of the investment. The effective yield is calculated
similarly, but the net investment income earned by the investment is assumed to
be compounded weekly when annualized. The effective yield will be slightly
higher than the yield due to this compounding effect.
The performance of the Fund may be compared to that of other money market
mutual funds tracked by Lipper Analytical Services, Inc., an independent
research firm which ranks mutual funds by overall performance, investment
objectives and assets, or by IBC/Donoghue's Money Fund Directory, a service
which reports on money market funds.
The Fund's yield and effective yield will fluctuate. Additional information
concerning the Fund's performance is described in the Statement of Additional
Information.
If you would like the yield or effective yield for the Fund, call toll free
1-800-247-4170 (in Iowa 1-800-422-3175, or in the Des Moines metropolitan area
call 225-5586), 24 hours a day, 7 days a week. The recorded message is updated
each weekday.
- --------------------------------------------------------------------------------
INVESTMENT
OBJECTIVE
AND POLICIES
- ---------------
The investment objective of the Fund is maximum current income consistent
with liquidity and stability of principal and may not be changed without
shareholder approval.
The Fund limits its investments to securities that meet the quality and
diversification requirements of Rule 2a-7 under the Investment Company Act of
1940 (the "Investment Company Act"). Under Rule 2a-7, the Fund may only purchase
United States denominated instruments that are determined to present minimal
credit risks and at the time of acquisition are rated in the top two rating
categories by the required number of nationally recognized statistical rating
organizations (at least two or, if only one such organization has rated the
security, that one organization) or, if unrated, are deemed comparable in
quality. The diversification requirements of Rule 2a-7 provide generally that
the Fund may not at the time of acquisition invest more than 5% of its assets in
securities of any one issuer or invest more than 5% of its assets in securities
that have not been rated in the highest category by the required number of
rating organizations or, if unrated, have not been deemed comparable, except
U.S. Government securities and repurchase agreements of such securities.
4
<PAGE>
The Fund seeks to achieve its objective by investing in the following money
market instruments maturing in thirteen months or less from the time of
investment, thereby allowing the Fund to maintain a dollar-weighted average
portfolio maturity of 90 days or less:
U.S. GOVERNMENT SECURITIES: Bills, notes, bonds and other debt
securities issued by the U.S. Treasury. These are direct obligations of the
U.S. Government and differ mainly in the length of their maturities.
U.S. GOVERNMENT AGENCY OR INSTRUMENTALITY SECURITIES: Debt securities
issued or guaranteed by agencies or instrumentalities of the U.S.
Government. Although these securities are not direct obligations of the U.S.
Government, some are supported by the full faith and credit of the U.S.
Treasury; others are supported only by the limited right of the issuer to
borrow from the U.S. Treasury; and others depend solely upon the credit of
the agency or instrumentality and not the U.S. Treasury.
OBLIGATIONS OF BANKS OR SAVINGS INSTITUTIONS: Certificates of deposit,
bankers' acceptances and other short-term debt obligations of commercial
banks or savings and loan associations. The Fund will not invest in any
instruments issued by a commercial bank unless it has total assets of at
least $100 million and has its deposits insured by the Federal Deposit
Insurance Corporation ("FDIC"). Similarly, the Fund will not invest in any
instrument issued by a savings and loan association unless it has total
assets of at least $100 million, has been issued a charter by the Office of
Thrift Supervision ("OTS") or was formerly a member of the Federal Home Loan
Bank System and is now subject to regulation by the OTS, and is insured by
the FDIC. However, the Fund may invest in an obligation of a bank or savings
and loan association with assets of less than $100 million if the principal
amount of such obligation is fully covered by FDIC insurance. The limit of
such coverage is currently $100,000.
COMMERCIAL PAPER: Short-term unsecured promissory notes issued by
corporations, primarily to finance short-term credit needs. The Fund will
only invest in commercial paper that is rated A-1 or A-2 by Standard &
Poor's Corporation ("S&P") or Prime-1 or Prime-2 by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, issued by a corporation having an
outstanding debt issue rated at least AA/Aa by S&P or Moody's.
In addition, the Fund will invest in commercial paper issued by major
corporations in reliance on the so-called "private placement" exemption from
registration by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper") subject to the above noted requirements with respect to ratings.
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as
the Fund, who agree that it is purchasing the paper for investment and not
with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) paper normally is resold to other
institutional investors through or with the assistance of the issuer or
investment dealers who make a market in the Section 4(2) paper, thus
providing liquidity. The Fund's investment adviser considers the legally
restricted but readily saleable Section 4(2) paper to be liquid; however,
the paper will be treated as illiquid unless, pursuant to procedures
approved by the Board of Directors, a particular investment in Section 4(2)
paper is determined to be liquid. The investment adviser monitors the
liquidity of the Fund's investments in Section 4(2) paper on a continuing
basis.
OTHER CORPORATE DEBT SECURITIES: Outstanding nonconvertible corporate
debt securities (e.g., bonds and debentures) which were not issued as
short-term obligations but which have thirteen months or less remaining to
maturity. The Fund will only invest in such obligations that at the time of
purchase are rated AA/Aa or better by S&P or Moody's.
5
<PAGE>
REPURCHASE AGREEMENTS: A repurchase agreement is an instrument under
which the Fund acquires a security from the seller who agrees, at the time
of the sale, to repurchase the security at a predetermined time and price,
thereby determining the yield during the Fund's holding period. That yield
is established by reference to current short-term rates and may be more or
less than the interest rate on the underlying security. The value of the
underlying security is marked-to-market daily. If the value of the
underlying security declines, the seller would be required to provide the
Fund with additional securities so that the aggregate value of the
underlying securities was at least equal to the repurchase price.
The Fund may also enter into a special type of repurchase agreement
known as an "open repurchase agreement." An open repurchase agreement varies
from the typical agreement in the following respects: (1) the agreement has
no set maturity, but instead matures upon 24 hours' notice to the seller;
and (2) the repurchase price is not determined at the time the agreement is
entered into, but instead is based on a variable interest rate and the
duration of the agreement.
Repurchase agreements maturing in more than seven days will not exceed
10% of the net assets of the Fund, and no more than 25% of the net assets of
the Fund may be invested in repurchase agreements in which the underlying
securities have maturities in excess of one year, although there is no limit
to the percentage of the Fund's assets which may be invested in repurchase
agreements that mature in seven days or less and have underlying securities
with maturities of one year or less. Net assets are taken at market value at
the time of purchase for purposes of the foregoing limitations. Open
repurchase agreements are considered to mature in one day.
If a seller of a repurchase agreement were to default, the Fund might
experience losses, including delays and expenses in enforcing its rights. To
minimize this risk, the investment adviser (under the review of the Board of
Directors) will review the creditworthiness of the seller, and must find
such creditworthiness satisfactory before the Fund may enter into the
repurchase agreement. Repurchase agreements may be entered into with banks
or securities dealers and the underlying securities will consist only of
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
FLOATING AND VARIABLE RATE SECURITIES: The Fund may invest in
instruments having rates of interest that are adjusted periodically or that
float continuously or periodically according to formulas intended to
minimize fluctuation in the value of the instruments ("Variable Rate
Securities"). The interest rate on a Variable Rate Security is ordinarily
determined by reference to, or is a percentage of, a specified market rate
such as a bank's prime rate, the 90-day U.S. Treasury Bill rate, or the rate
of return on commercial paper or bank certificates of deposit. Generally,
the changes in the interest rate on Variable Rate Securities reduce the
fluctuation in the market value of such securities. Accordingly, as interest
rates decrease or increase, the potential for capital appreciation or
depreciation is less than for fixed rate obligations. Some Variable Rate
Securities have a demand feature ("Variable Rate Demand Securities")
entitling the purchaser to resell the securities at an amount approximately
equal to the principal amount thereof plus accrued interest. As in the case
for other Variable Rate Securities, the interest rate on Variable Rate
Demand Securities varies according to some specified market rate intended to
minimize fluctuation in the value of the instruments. Some of these Variable
Rate Demand Securities are unrated, their transfer is restricted by the
issuer and there is little, if any, secondary market for the securities.
Thus, any inability of the issuers of such securities to pay on demand could
adversely affect the liquidity of these securities. The Fund determines the
maturity of Variable Rate Securities in accordance with Securities and
Exchange Commission rules which allow the Fund to consider certain of such
instruments as having maturities shorter than the maturity date on the face
of the instrument.
6
<PAGE>
WHEN-ISSUED OR DELAYED DELIVERY TRANSACTIONS: From time to time, in the
ordinary course of business, the Fund may purchase newly-issued securities
on a "when-issued" basis and may purchase or sell securities on a "delayed
delivery" basis. When-issued or delayed delivery transactions involve a
commitment by the Fund to purchase or sell particular securities with
payment and delivery to take place at a future date. These transactions
allow the Fund to lock in an attractive purchase price or yield on a
security it intends to purchase or an attractive sale price on a security it
intends to sell. Normally, settlement occurs within one month of the
purchase or sale. During the period between purchase or sale and settlement,
no payment is made or received by the Fund and, for delayed delivery
purchases, no interest accrues to the Fund. The Fund will only make
commitments to purchase securities on a when-issued or delayed delivery
basis with the intention of actually acquiring the securities, but it
reserves the right to sell such securities before the settlement date if
deemed advisable.
At the time the Fund makes the commitment to purchase a security on a
when-issued or delayed delivery basis, it will record the transaction and
reflect the amount due and the value of the security in determining its net
asset value. Likewise, at the time the Fund makes the commitment to sell a
security on a delayed delivery basis, it will record the transaction and
include the proceeds to be received in determining its net asset value;
accordingly, any fluctuations in the value of the security sold pursuant to
a delayed delivery commitment are ignored in calculating net asset value so
long as the commitment remains in effect. The market value of the
when-issued or delayed delivery securities at any time may be more or less
than the purchase price to be paid or the sale price to be received at the
settlement date. To the extent that the Fund engages in when-issued or
delayed delivery transactions, it will do so for the purpose of acquiring or
selling securities consistent with its investment objectives and policies
and not for the purpose of investment leverage or to speculate on interest
rate changes.
The investment adviser does not believe that the Fund's net asset value
or income will be adversely affected overall by the purchase of securities
on a when-issued or delayed delivery basis. The Fund will establish a
segregated account with its custodian bank in which it will maintain cash or
U.S. Government securities or other high-grade debt obligations at least
equal in value to commitments to purchase securities on a when-issued or
delayed delivery basis; subject to this requirement, the Fund may purchase
securities on a when-issued or delayed delivery basis without limit. To the
extent that assets of the Fund are held in cash pending the settlement of a
purchase of securities, the Fund would earn no income. In the case of a
commitment to sell securities on a delayed delivery basis, the Fund will
instruct the custodian to hold the Fund securities themselves in a
segregated account while the commitment is outstanding.
Stability of principal is a primary investment objective of the Fund and,
while the types of money market securities in which the Fund invests generally
are considered to have low principal risk, such securities are not completely
risk free. There is some risk that issuers will fail to meet their principal and
interest obligations on a timely basis, therefore there can be no guarantee that
the Fund will achieve its objective or that it will maintain a net asset value
of $1.00 per share. The net asset value of $1.00 per share has, however, been
maintained by the Fund since its inception. Thus, no shareholder has ever lost
any principal from an investment in the Fund.
The Fund has adopted a number of restrictions and policies relating to the
investment of its assets and its activities that are fundamental and may not be
changed without the approval of the holders of a "majority of the Fund's
outstanding voting securities" as such term is defined in the Investment Company
Act of 1940. A complete list of these investment restrictions and policies is
contained in the Fund's Statement of Additional Information.
7
<PAGE>
- --------------------------------------------------------------------------------
HOW TO
BUY
SHARES
- ---------
The Fund's shares are sold at their net asset value next determined after an
order and payment are received in the form described below. Purchase orders in
proper form received by wire transfer will be effected at the next determined
net asset value. If you invest by mail, purchase orders in proper form will be
effected at the net asset value next determined after the funds have been
converted into Federal Funds, normally one full business day after receipt. The
Fund is generally open for business, and its net asset value is computed, on
each day the New York Stock Exchange is open for trading (except the Tuesday
after Christmas and the day after Thanksgiving). The Fund reserves the right to
reject any purchase order and to change the minimum purchase requirements at any
time.
INITIAL PURCHASE
The minimum initial purchase is $500, except there is no minimum initial
investment for retirement accounts and accounts opened under bona fide payroll
deduction plans. There is no sales charge. An Application may be obtained from
the Fund or from a registered representative of FBL Marketing Services, Inc. The
proper form for initial purchase orders is as follows:
By Mail:
Complete the Application and mail it with your check payable to "FBL Money
Market Fund, Inc." to: FBL Money Market Fund, Inc., 3820 109th Street, Des
Moines, Iowa 50391-7003.
By Wire:
Call our toll free number (800) 247-4170 (in Iowa call toll free (800)
422-3175, or in the Des Moines metropolitan area call 225-5586) to obtain an
Account Number and to provide the Fund with your name, address and social
security or tax identification number. Then, simply instruct your bank to "wire
transfer" funds to: BANKERS TRUST COMPANY, ABA #021001033, DDA ACCOUNT #00220644
FBL MONEY MARKET FUND, INC., FOR FURTHER CREDIT TO YOUR ACCOUNT REGISTRATION AND
ACCOUNT NUMBER. Finally, complete the Application and mail it to the Fund at the
address listed above under "Initial Purchase--By Mail."
SUBSEQUENT PURCHASES
The proper form for subsequent purchase orders is as follows:
By Mail (no minimum):
Send the Fund a check payable to the Fund accompanied by a letter indicating
the dollar value of the shares to be purchased, the account number and the
registered owner(s).
By Wire (no minimum):
Instruct your bank to "wire transfer" funds as outlined above under "Initial
Purchase--By Wire."
8
<PAGE>
- --------------------------------------------------------------------------------
HOW TO
REDEEM
SHARES
---------
Upon receipt of an executed redemption request in proper form as described
below, the Fund will redeem shares at their next determined net asset value. The
Fund intends to pay redemption proceeds within one business day after receipt of
an executed redemption request in proper form. If shares to be redeemed were
purchased by check, the Fund may delay transmittal of redemption proceeds until
such time, not to exceed 15 days after the redemption request, as it has assured
itself that good payment has been collected for the purchase of such shares.
SHAREHOLDERS MAY NOT USE EXPEDITED REDEMPTION PROCEDURES (DRAFT OR TELEPHONE
REDEMPTION) IF SHARES WERE PURCHASED BY CHECK UNTIL THE SHARES BEING REDEEMED
HAVE BEEN ON THE FUND'S BOOKS FOR AT LEAST 4 BUSINESS DAYS. There is no such
delay when redeeming shares that were purchased by wire.
The Fund reserves the right to redeem an account which an investor has
reduced to a value of less than $500. A shareholder will be notified accordingly
and permitted 60 days to make additional share purchases before the liquidating
redemption is processed.
By Mail (no minimum):
Send a letter to the Fund, 3820 109th Street, Des Moines, Iowa 50391-7003,
requesting redemption of either the number or dollar value of shares to be
redeemed. Any certificates for shares to be redeemed must be included, duly
endorsed. The letter (and certificates, if any) must be signed exactly as the
account is registered. On a jointly owned account, all owners must sign.
SIGNATURES OF ACCOUNT OWNERS MUST BE GUARANTEED BY A COMMERCIAL BANK, TRUST
COMPANY, MEMBER OF A STOCK EXCHANGE, SAVINGS AND LOAN ASSOCIATION OR SAVINGS
BANK, OTHER ELIGIBLE FINANCIAL INSTITUTION, OR A REGISTERED REPRESENTATIVE OF
FBL MARKETING SERVICES, INC. OR FBL INVESTMENT ADVISORY SERVICES, INC., and
shall include such other documentation of authority as the Fund deems necessary
in the case of estates, trusts, guardianships, corporations, unincorporated
associations and pension and profit sharing plans. THE FUND CANNOT ACCEPT
GUARANTEES FROM NOTARIES PUBLIC.
By Draft (no minimum):
A shareholder may redeem shares by writing drafts drawn on Norwest Bank
Iowa, N.A., payable to the order of any person in any amount. A shareholder
wishing to use this method of redemption must complete the appropriate portion
of the Application including a signature card. Drafts can be ordered by the
shareholder, for a charge of $12.00 per 175 drafts ordered, after all necessary
application forms have been received in proper form. The cost of the drafts
ordered by the shareholder will be collected by redemption of shares, or
fractions thereof, from the shareholder's account. If the entire account is
redeemed by draft, dividends credited to that account from the beginning of the
month through the day of redemption will be paid by a separate check mailed to
the address of record. Payment of drafts is subject to acceptance by the Fund,
and the Fund may refuse to honor drafts whenever the right of redemption has
been suspended or postponed, or whenever the shareholder's account is otherwise
impaired. When the draft is presented for payment and accepted, a sufficient
number of shares in the account will be redeemed to pay the amount of the draft.
When a draft is presented to redeem Fund shares in excess of the value of the
account OR TO REDEEM SHARES PURCHASED BY CHECK WITHIN 4 BUSINESS DAYS, the draft
will be returned marked "insufficient funds" and a service charge of $10.00 will
be levied on all drafts so marked. Redemption by draft is not available for
Retirement Accounts or shares for which certificates have been issued.
9
<PAGE>
By Telephone ($1,000 minimum):
Shareholders may redeem shares by telephone. The proceeds of shares so
redeemed will be sent by check to the shareholder of record at the address of
record. A shareholder wishing to use this method of redemption must complete the
appropriate portions of the Application and it must be on file with the Fund.
All applications for telephone redemption must have signatures guaranteed by a
commercial bank, trust company, member of a stock exchange, savings and loan
association or savings bank, other eligible financial institution, or a
registered representative of FBL Marketing Services, Inc. or FBL Investment
Advisory Services, Inc., and shall include such other documentation of authority
as the Fund deems necessary in the case of estates, trusts, guardianships,
corporations, unincorporated associations and pension and profit sharing plans.
THE FUND CANNOT ACCEPT GUARANTEES FROM NOTARIES PUBLIC. Once the completed form
is on file, the Fund will honor redemption requests by ANY PERSON by telephone,
using the toll free numbers listed on the cover page, telegraph or other methods
without a signature guarantee from the shareholder or any other person. Proceeds
may also be paid to the shareholder by wire transfer, but only to the bank and
account on file as designated by the shareholder, which must be a domestic
commercial bank that is a member of the Federal Reserve System. Although the
Fund does not charge for wiring funds, the shareholder will be responsible for
wire fees, if any, charged by the receiving bank. The Adviser employs procedures
designed to confirm that instructions communicated by telephone are genuine,
including requiring certain identifying information prior to acting upon
instructions, recording all telephone instructions and sending written
confirmations of instructions. To the extent such procedures are reasonably
designed to prevent unauthorized or fraudulent instructions neither the Adviser
nor the Fund would be liable for any losses from unauthorized or fraudulent
instructions. The Fund reserves the right to terminate this telephone redemption
privilege at any time. This procedure is not available for Retirement Accounts
or shares for which certificates have been issued.
- --------------------------------------------------------------------------------
OTHER
SHAREHOLDER
SERVICES
- ----------------
The Fund offers a number of shareholder services designed to facilitate
investment in its shares. Full details as to each of such services and copies of
the various plans described below can be obtained from the Fund.
PERIODIC WITHDRAWAL PLAN:
A shareholder who owns $5,000 or more of Fund shares in a single account may
establish a Periodic Withdrawal Plan to provide for regular monthly, quarterly
or annual payments of a fixed dollar amount or fixed percent of the account
balance ($100 annual minimum) to be sent to the shareholder or a designated
payee. Fund shares held in the shareholder's account having a net asset value of
the amount of the requested payment will be redeemed on or around the fifth
business day before the end of the applicable month and a check will be mailed
to the investor within seven days thereafter.
AUTOMATIC INVESTMENT PLAN:
A shareholder may elect to participate in the Fund's automatic investment
plan. This plan enables a shareholder to automatically purchase shares of the
Fund on a monthly basis. A minimum initial investment of $50 is required to
establish an automatic investment plan. Minimum monthly investments of $25 are
necessary to maintain the plan. The Fund will debit the shareholder's financial
institution
10
<PAGE>
account and subsequently purchase shares of the Fund having a net asset value of
the amount of the requested deposit on or around the 16th day of the month.
Shareholders interested in this plan must complete an automatic investment form
available from the Fund.
EXCHANGE PRIVILEGE:
A shareholder may exchange all or some Fund shares for shares of any
portfolio of FBL Series Fund, Inc., if that fund's shares are offered for sale
in the shareholder's state of residence. FBL Series Fund, Inc. currently offers
six Portfolios: Growth Common Stock Portfolio, High Grade Bond Portfolio, High
Yield Bond Portfolio, Managed Portfolio, Money Market Portfolio and Blue Chip
Portfolio. A prospectus for FBL Series Fund, Inc. may be obtained by writing or
calling that fund at the same address or phone numbers as shown on the cover
page of this prospectus. Shares of that fund are subject to a contingent
deferred sales charge of up to 5%, as described in its prospectus. Exchanges may
be for any amount, except that if a new account is established by the exchange
privilege, an application for that account must be completed and mailed to the
fund, and the minimum initial purchase amount must be met. Exercise of the
exchange privilege is treated as a sale for federal income tax purposes and,
depending on the circumstances, a gain or loss may be realized by the
shareholder. Shareholders of the Fund interested in exercising the exchange
privilege must first obtain a prospectus and an exchange form from the Fund.
Once the completed exchange form is on file with the Fund, exchanges may be
authorized by telephone (by ANY PERSON) or by letter. This privilege may be
modified or terminated by the Fund at any time.
A shareholder may also request exchanges to any portfolio of FBL Series
Fund, Inc. on a monthly or quarterly basis using the automatic exchange
privilege. Automatic exchanges occur on the 20th day of the month of the elected
schedule or the following business day if the 20th is a holiday or weekend day.
Shareholders interested in the automatic exchange privilege must first obtain a
prospectus and an automatic exchange form from that fund. Automatic exchanges
are subject to the considerations listed in the above paragraph.
RETIREMENT PLANS:
Eligible shareholders of the Fund may participate in a variety of qualified
retirement plans which are available from FBL Investment Advisory Services, Inc.
Some of the plans currently offered are: Self-Employed Individual Retirement
Plans (Keogh Plans), Individual Retirement Accounts (IRAs), Simplified Employee
Pension Plans (SEPs), Tax Sheltered 403(b) Plans, Corporate Pension and Profit
Sharing Plans, and Public Employer Deferred Compensation Plans. The initial
investment to establish any such plan, and subsequent investments, may be in any
amount (subject to plan limitations). Investors Fiduciary Trust Company ("IFTC")
of Kansas City, Missouri serves as custodian and provides the required services
for Keogh Plans, IRAs, SEPs and Corporate Pension and Profit Sharing Plans. A
custodial fee, currently $10.00, will be collected annually by redemption of
shares, or fractions thereof, from each participant's account(s). FBL Investment
Advisory Services, Inc. performs plan services for IFTC for a portion of the
fee. Information with respect to these plans is available upon request from the
Fund.
Trustees of qualified retirement plans and 403(b)(7) custodial accounts are
required by law to withhold 20% of the taxable portion of any distribution that
is eligible to be "rolled over." The 20% withholding requirement does not apply
to distributions from IRAs or any part of a distribution which is transferred
directly to another qualified retirement plan, 403(b)(7) account or IRA.
Shareholders should consult their tax advisers regarding this 20% withholding
requirement.
11
<PAGE>
- --------------------------------------------------------------------------------
NET
ASSET
VALUE
- -------
The net asset value per share of the Fund is determined as of the earlier of
3:00 p.m. (Central Time) or the close of the New York Stock Exchange on each day
the Exchange is open (except the Tuesday after Christmas and the day after
Thanksgiving) and on each other day on which there is sufficient trading in the
Fund's investments that it might affect the net asset value, except that the net
asset value will not be computed on a day when no orders for purchase or
redemption of shares are received. If the Fund offices should be closed because
of a weather-related or comparable type of emergency, and the Fund is unable to
segregate orders and redemption requests received on the emergency closed day,
then the Fund will price those orders and redemptions at the net asset value
next determined. The net asset value per share is computed by dividing the total
value of the Fund's securities and other assets, less liabilities (including
dividends payable), by the number of Fund shares outstanding. The Fund seeks to
maintain a constant net asset value per share of $1.00. The Fund's total assets
are determined by valuing the portfolio securities at amortized cost pursuant to
Rule 2a-7 under the Investment Company Act.
- --------------------------------------------------------------------------------
MANAGEMENT
OF THE
FUND
- ---------------
DIRECTORS:
The Fund has a board of nine directors, five of whom are not "interested
persons" of the Fund as defined in the Investment Company Act. The Board of
Directors is responsible for the overall supervision of the operations of the
Fund and the performance of the various duties imposed on the directors of
investment companies by the Investment Company Act. The Board of Directors
elects officers of the Fund annually.
INVESTMENT ADVISER AND UNDERWRITER:
FBL Investment Advisory Services, Inc. ("FBL" or "Adviser"), 5400 University
Avenue, West Des Moines, Iowa 50266, acts as the Fund's investment adviser,
manager and principal underwriter and is sole distributor of the Fund's shares.
FBL has served as the Fund's investment adviser, manager and underwriter since
the Fund commenced operations in 1981. FBL is an indirect subsidiary of Farm
Bureau Multi-State Services, Inc., an Iowa corporation. The following
individuals are officers and/or directors of both FBL and the Fund: Stephen M.
Morain, Thomas R. Gibson, Timothy J. Hoffman, Dennis M. Marker, William J. Oddy,
Richard D. Warming, Sue A. Cornick, Kristi Rojohn and Elaine A. Followwill. The
Adviser also acts as an investment adviser to individuals, institutions and two
other mutual funds: FBL Series Fund, Inc. and FBL Variable Insurance Series
Fund. Personnel of the Adviser also manage investments for the portfolios of
insurance companies.
The Adviser handles the investment and reinvestment of the Fund's assets,
and is responsible for the overall management of the Fund's business affairs,
subject to the supervision of the Board of Directors. As compensation for the
advisory and management services provided by the Adviser, the Fund has agreed to
pay the Adviser an annual management fee, accrued daily and payable monthly, on
a graduated basis of .50% of the first $200 million of average daily net assets,
.40% on the next $200
12
<PAGE>
million of average daily net assets, .35% on the next $200 million of average
daily net assets and .30% of average daily net assets over $600 million. For the
fiscal year ended July 31, 1995, the Fund incurred advisory fees amounting to
.50% of average net assets.
SHAREHOLDER SERVICE, DIVIDEND DISBURSING AND TRANSFER AGENT:
FBL serves as the Fund's Shareholder Service, Dividend Disbursing and
Transfer Agent for a separate fee. FBL in turn has contracted with DST Systems,
Inc., an unrelated party, to perform certain services incidental to the
maintenance of shareholder accounts for a portion of the fee.
ACCOUNTING SERVICES:
The Fund has entered into an accounting services agreement with FBL pursuant
to which FBL performs accounting services for the Fund. In addition, the
agreement provides that FBL shall calculate the Fund's net asset value in
accordance with the Fund's Prospectus and prepare for Fund approval and use
various tax returns and other reports. For such services the Fund pays FBL an
annual fee, payable monthly, of .05% of the Fund's average daily net assets,
with the annual fee payable by the Fund not to exceed $30,000.
- --------------------------------------------------------------------------------
PORTFOLIO
TRANSACTIONS
-----------------
Purchases and sales of portfolio securities are normally principal
transactions. Portfolio securities are normally purchased directly from the
issuer or from an underwriter or market maker for the securities. There are
usually no brokerage commissions paid by the Fund for such purchases and none
were paid during the fiscal year ended July 31, 1995. Purchases from
underwriters will include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked price. The primary consideration in the
allocation of transactions is the most favorable price and execution of orders.
- --------------------------------------------------------------------------------
DIVIDENDS
-----------
The Fund declares dividends of all its daily net investment income on each
day the Fund's net asset value per share is determined. Dividends are payable
monthly and are automatically reinvested and distributed on the last business
day of each month in full and fractional shares of the Fund at the then current
net asset value, unless a shareholder requests payment in cash. Each
non-qualified shareholder will receive a monthly summary of account activity,
including information on dividends paid or reinvested. Qualified account
shareholders will receive a quarterly statement reflecting dividend activity. If
the entire amount in an account is redeemed at any time during a month,
dividends credited to that account from the beginning of the month through the
day of redemption will be paid in addition to the proceeds of the redemption.
The Fund's net investment income, for dividend purposes, consists of (1)
accrued interest income, plus or minus amortized purchase discount or premium,
(2) plus or minus all short-term realized gains or losses and unrealized
appreciation or depreciation on portfolio assets, and (3) minus all accrued
expenses of the Fund. Expenses of the Fund are accrued daily. So long as the
Fund's portfolio securities are valued at amortized cost there would be no
unrealized appreciation or depreciation on portfolio securities.
13
<PAGE>
- --------------------------------------------------------------------------------
TAXES
- ------
The Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended. If so qualified, the Fund
will not be subject to federal income taxes to the extent that it distributes
its taxable investment income and realized gains. Distributions of net income
including any net short-term capital gains are taxable to shareholders as
ordinary income, whether such distributions are taken in cash or reinvested in
additional shares. Of course, such distributions are not taxable to shareholders
who are not subject to income tax. Distributions from the Fund do not qualify
for the "dividends received deduction" available to corporate shareholders.
Distributions declared in October, November or December to shareholders of
record as of a date in one of those months and paid during the following January
are treated for federal income tax purposes as paid on December 31 of the
calendar year in which declared. Shareholders are advised to consult with their
tax advisers. Statements as to the tax status of distributions to shareholders
will be furnished to shareholders annually.
The Fund is required by law to withhold 31% of taxable distributions to
shareholders who do not furnish their correct social security or taxpayer
identification number and in certain other circumstances.
- --------------------------------------------------------------------------------
GENERAL
INFORMATION
- ---------------
ORGANIZATION OF THE FUND
The Fund is a no-load, open-end, diversified management investment company
incorporated under Maryland law on November 5, 1980. The Fund has authorized
capital of 500,000,000 shares of capital stock, $0.001 par value per share. All
shares of capital stock have equal voting rights and equal rights with respect
to dividends, assets, liquidation and redemption. They are fully paid and
non-assessable when issued and have no preemptive, conversion or exchange
rights. The shares are transferable without restriction. Full and fractional
shares may be issued and each fractional share has proportionately the same
rights, including voting, as are provided for a full share.
SHAREHOLDER VOTING RIGHTS
Under the Fund's corporate charter and by-laws, the Fund is not required to
hold, and does not anticipate that it will hold, annual shareholders' meetings.
However, it will hold special meetings of shareholders as required or deemed
desirable for such purposes as electing directors, changing fundamental policies
or approving an investment management agreement.
Each member of the Board of Directors serves for a term of unlimited
duration, subject to the right to remove a Director by the Board of Directors or
the shareholders. The Board of Directors has the power to alter the number of
directors and to appoint successor directors, provided that immediately after
the appointment of any successor director, at least two-thirds of the directors
have been elected by the shareholders of the Fund. However, if at any time less
than a majority of the directors holding office has been elected by the
shareholders, the directors are required to call a special meeting of
shareholders for the purpose of electing directors to fill any existing
vacancies on the Board.
As used in this Prospectus and in the Statement of Additional Information,
the phrase "majority of the Fund's outstanding voting securities" means the vote
of the lesser of (i) 67% of the shares of the Fund present at a meeting if the
holders of more than 50% of the outstanding shares are present in person or by
proxy, or (ii) more than 50% of the outstanding shares of the Fund.
14
<PAGE>
REPORTS TO SHAREHOLDERS
Shareholders will receive unaudited semi-annual financial statements and
fiscal year-end financial statements audited by the Fund's independent auditors.
SHAREHOLDER INQUIRIES
Shareholders may make inquiries either by contacting their registered
representative or by writing or calling the Fund at the address or phone numbers
as shown on the front cover.
15
<PAGE>
INSTITUTIONAL ACCOUNTS
Please execute the applicable sections below (all blanks should be completed
with the requested information and inappropriate alternatives should be
deleted).
CORPORATION/ASSOCIATION
I, ________________________________________, Secretary of
________________________, a (corporation) (unincorporated association),
organized under the laws of ____________________________________________________
(the "Organization"), certify that the following resolutions have been adopted
by the (board of directors) (trustees) (other managing body) of said
Organization and are now in full force and effect:
"RESOLVED, that the Organization establish an account in FBL Money Market
Fund, Inc. (the "Fund") and purchase shares of the Fund from time to time, and
the officers of this Organization are authorized to execute the Application for
such account presented for approval (being the form on which this certificate is
set forth) and select the draft redemption privilege and telephone redemption
privilege related to such account in accordance with the terms on such
Application;
FURTHER RESOLVED, that any ______________ (insert number of signatures
selected on the signature card) of the following officers of the Organization:
________________________________________________________________________________
_____________________________________________________ (insert titles) (is) (are)
authorized to execute drafts drawn pursuant to the Fund's draft redemption
privilege and the Fund, Norwest Bank Iowa, N.A. (the "Bank"), FBL Investment
Advisory Services, Inc. ("FBL") and their representatives are authorized to
honor as genuine and authorized all redemption drafts drawn pursuant to said
draft redemption privilege on behalf of the Organization signed with the actual
or facsimile signatures of said officers as certified to the Fund by the
Secretary of this Organization without inquiry as to the circumstances of their
issue or the disposition of any proceeds;
FURTHER RESOLVED, that in the case of facsimile signatures, redemption drafts
bearing the facsimile specimens or signatures resembling the facsimile specimens
may be honored as genuine and authorized regardless of by whom or by what means
the facsimile signatures thereon have been affixed thereto;
FURTHER RESOLVED, that any one of the aforesaid officers is authorized to act
for the Organization in all other cases in connection with the account of the
Organization with the Fund including providing instructions to the Fund, the
Bank, FBL or their representatives;
FURTHER RESOLVED, that these appointments and authorizations shall remain in
effect and the Fund, the Bank, FBL and their representatives may act thereon
until a revocation or modification thereof by this managing body, certified by
the Secretary of this Organization, shall be delivered to FBL."
The undersigned Secretary further certifies that the officers of this
Organization listed on the signature card as persons authorized to sign drafts
are now acting in the capacity listed and that the signatures of said persons
set forth on the signature card are genuine and authorized.
IN WITNESS WHEREOF, I have set my hand and the seal of this Organization this
____ day of ______________, 19____.
(SEAL) _____________________________
Secretary
- --------------------------------------------------------------------------------
PARTNERSHIP/TRUST/FIDUCIARY
In connection with the establishment of an account with FBL Money Market Fund,
Inc. (the "Fund") under the name _______________________________________________
_______________________, the undersigned certify that they are all of the (part-
ners) (trustees) (other fiduciaries) under the (partnership agreement) (trust)
(will) (court order) (other instrument) described as follows ___________________
_________________________________________________________________ (give detailed
description and dates) and certify that they have full power and authority to
establish an account with the Fund (the "Account") and to select the draft
redemption and telephone redemption privileges in accordance with the
Application to which this certification is attached. The undersigned further
certify that the execution of the Application and the selection of the
privileges noted above and the purchase from time to time of shares of the Fund
in connection therewith have been duly authorized. The undersigned agree to be
bound by the terms and conditions contained in the Application, signature card
and the Fund's current prospectus. The undersigned agree that the persons listed
on the signature card acting with the number of signatures indicated on said
signature card are authorized to execute drafts drawn pursuant to the Fund's
draft redemption privilege and the Fund, Norwest Bank Iowa, N.A. (the "Bank"),
FBL Investment Advisory Services, Inc. ("FBL") and their representatives are
authorized to honor as genuine and authorized all redemption drafts drawn
pursuant to said draft redemption privilege in connection with the Account
signed with the signatures of said persons described above as certified herein
without inquiry as to the circumstances of their issue or the disposition of any
proceeds. The undersigned certify that the signatures set forth on the front of
the Application and signature card are genuine and authorized. The undersigned
agree that any one of the aforesaid persons are authorized to act for the owner
of the Account in all other cases, including providing instructions to the Fund,
the Bank, FBL or their representatives. This certification shall remain in
effect and the Fund, the Bank, FBL and their representatives may act in reliance
thereon until a revocation or modification thereof certified to by the
undersigned or their successors is delivered to FBL. All certifications and
agreements herein are made jointly and severally.
<TABLE>
<S> <C> <C>
Dated:
Signature Title or Capacity
Signature Title or Capacity
Signature Title or Capacity
</TABLE>
<PAGE>
<TABLE>
<S> <C>
INVESTMENT ADVISER, UNDERWRITER, CUSTODIAN
SHAREHOLDER SERVICE, DIVIDEND DISBURSING Bankers Trust Company
AND TRANSFER AGENT Global Assets -- Insurance Group
FBL Investment Advisory Services, Inc. 16 Wall Street
5400 University Avenue New York, New York 10005
West Des Moines, Iowa 50266
LEGAL COUNSEL INDEPENDENT AUDITORS
Vedder, Price, Kaufman & Kammholz Ernst & Young LLP
Suite 2600 Suite 3400
222 North LaSalle Street 801 Grand Avenue
Chicago, Illinois 60601 Des Moines, Iowa 50309
</TABLE>
<PAGE>
------------------------------------------------------------------------
Farm Bureau Mutual Funds
FBL Money
Market Fund, Inc.
[LOGO]
PROSPECTUS
DECEMBER 1, 1995
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
FBL INVESTMENT ADVISORY
SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800-422-3175 (IN IOWA)
225-5586 (DES MOINES)
FARM BUREAU MUTUAL FUNDS
[LOGO]
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
737-118(12/95)
<PAGE>
PART B
FARM BUREAU MUTUAL FUNDS
FBL MONEY MARKET FUND, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
(515) 225-5586
STATEMENT OF ADDITIONAL INFORMATION
December 1, 1995
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of FBL Money Market Fund, Inc. (the
"Fund") dated December 1, 1995. A copy of the Prospectus may be obtained
without charge by writing or calling the Fund at the address and telephone
number shown above.
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . .B-2
OFFICERS AND DIRECTORS . . . . . . . . . . . . . .B-4
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . .B-9
NET ASSET VALUE . . . . . . . . . . . . . . . . . .B-9
CALCULATION OF FUND'S YIELD . . . . . . . . . . . .B-10
RETIREMENT PLANS . . . . . . . . . . . . . . . . . .B-11
REDEMPTIONS . . . . . . . . . . . . . . . . . . . .B-13
INVESTMENT ADVISER . . . . . . . . . . . . . . . . .B-13
UNDERWRITING AND DISTRIBUTION. . . . . . . . . . . .B-16
OTHER INFORMATION . . . . . . . . . . . . . . . . .B-16
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . .B-17
<PAGE>
INVESTMENT RESTRICTIONS
In seeking to achieve its investment objective as stated in the Prospectus, the
Fund has adopted the following investment restrictions. The Fund will not:
1. Purchase securities of any issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) if, as a
result, more than 5% of the value of the Fund's assets (taken at current value
at the time of investment) would be invested in securities of that issuer.
2. Purchase more than 10% of any class of securities of any issuer other
than securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. (For this purpose, all outstanding debt securities of an
issuer are considered one class.)
3. Engage in puts, calls, straddles, spreads or any combination thereof;
nor engage in margin purchases, except for use of short-term credits necessary
for clearance of purchases and sales of portfolio securities.
4. Make short sales of securities or maintain a short position in
securities.
5. Invest in real estate, including interests in real estate investment
trusts (although it may invest in securities secured by real estate or interests
therein or securities issued by companies which invest in real estate or
interests therein) or invest in commodities or commodity contracts, including
futures contracts.
6. Invest more than 5% of the value of the Fund's total assets (taken at
current value at the time of investment) in securities of issuers, other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, which have a record of less than three years continuous
operations, including predecessors.
7. Purchase or retain the securities of any issuer if any of the officers
or directors of the Fund or its investment adviser own individually more than
1/2 of 1% of the securities of such issuer and together own more than 5% of the
securities of such issuer.
8. Concentrate its investments in any one industry by investing 25% or
more of the value of the Fund's total assets (taken at current value at the time
of investment) in any one industry, other than securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, obligations of
banks or savings institutions, or instruments secured by these money market
instruments, such as repurchase agreements for U.S. Government securities.
9. Make loans to others (except through the purchase of debt obligations
or repurchase agreements referred to under "Investment Objective and Policies"
in the Prospectus). In addition, the Fund may not invest more than 10% of its
net assets (taken
B-2
<PAGE>
at current value at the time of investment) in repurchase agreements maturing in
more than seven days.
10. Borrow money, except from banks for temporary or emergency purposes and
in no event in excess of 10% of its gross assets taken at the lesser of cost or
market or other fair value (the Fund will not borrow in order to increase income
(leveraging) but may borrow to facilitate meeting redemption requests which
might otherwise require untimely disposition of portfolio securities; interest
paid on any such borrowings will reduce net investment income); nor will it
pledge or mortgage more than 15% of its gross assets taken at cost, except in
connection with permissible borrowings discussed immediately above; nor purchase
money market instruments while any such permissible borrowings are outstanding.
11. Act as an underwriter in securities. In this connection, the Fund will
not invest more than 10% of the value of its total assets in securities (except
repurchase agreements) which are subject to legal or contractual restrictions on
resale, or are not readily marketable.
12. Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization.
13. Invest in companies for the purpose of exercising management or
control.
14. Purchase any common stocks or other equity securities, or securities
convertible into stock.
15. Issue senior securities.
The investment restrictions described above are fundamental and may not be
changed without the approval of the lesser of (i) 67% of the shares represented
at the meeting of the shareholders at which the holders of 50% or more of the
shares are represented in person or by proxy or (ii) more than 50% of the
outstanding voting securities.
In addition, the Fund may not: (a) purchase securities which are subject
to legal or contractual restrictions on resale in excess of 5% of the value of
the Fund's net assets; (b) invest in interests in oil, gas or other mineral
exploration or development programs or invest in oil, gas, or other mineral
leases; (c) pledge, mortgage or hypothecate its portfolio securities to the
extent that at any time the percentage of pledged securities would exceed 10% of
the Fund's total net assets; or (d) invest in real estate limited partnerships.
These restrictions, (a) through (d), may be changed by the Board of Directors
without shareholder approval.
B-3
<PAGE>
OFFICERS AND DIRECTORS
The officers and directors of the Fund, their age and their principal
occupations for the past five years are set forth below, though corporate
positions may, in some instances, have changed during this period. The address
of the officers of the Fund is 5400 University Avenue, West Des Moines, Iowa
50266. The directors listed with an asterisk are "interested persons" of the
Fund as defined in the Investment Company Act of 1940.
MERLIN D. PLAGGE*, PRESIDENT AND DIRECTOR (65)
Farmer; President and Director, Iowa Farm Bureau Federation, Farm Bureau
Multi-State Services, Inc., Farm Bureau Life Insurance Company, Universal
Assurors Life Insurance Company, FBL Insurance Brokerage, Inc., Farm Bureau
Mutual Insurance Company, Utah Farm Bureau Insurance Company, FBL Financial
Services, Inc., BIC, Inc. and Farm Bureau Agricultural Business
Corporation; Director, Western Farm Bureau Management Corporation, Western
Farm Bureau Life Insurance Company, Western Agricultural Insurance Company
and American Agricultural Insurance Company.
EUGENE R. MAAHS*, SENIOR VICE PRESIDENT, SECRETARY-TREASURER AND DIRECTOR (64)
Senior Vice President and Secretary-Treasurer, Farm Bureau Multi-State
Services, Inc., Farm Bureau Life Insurance Company, Universal Assurors Life
Insurance Company, Farm Bureau Mutual Insurance Company, Utah Farm Bureau
Insurance Company, FBL Financial Services, Inc. and FBL Insurance
Brokerage, Inc.; Executive Director and Secretary-Treasurer, Iowa Farm
Bureau Federation; Senior Vice President and Assistant Secretary-Treasurer,
South Dakota Farm Bureau Mutual Insurance Company; Vice President and
Treasurer, Farm Bureau Management Corporation; Former Administrative
Director, Iowa Farm Bureau Federation; Former Executive Vice President and
Director, Communications Providers, Inc.; Co-Owner, Country Gardens.
STEPHEN M. MORAIN*, SENIOR VICE PRESIDENT, GENERAL COUNSEL, ASSISTANT SECRETARY
AND DIRECTOR (50)
General Counsel and Assistant Secretary, Iowa Farm Bureau Federation;
General Counsel, Secretary and Director, Farm Bureau Management
Corporation; Senior Vice President and General Counsel, Farm Bureau Multi-
State Services, Inc., Farm Bureau Life Insurance Company, Universal
Assurors Life Insurance Company, Farm Bureau Mutual Insurance Company, Utah
Farm Bureau Insurance Company, FBL Financial Services, Inc., FBL Insurance
Brokerage, Inc. and South Dakota Farm Bureau Mutual
B-4
<PAGE>
Insurance Company; Senior Vice President, General Counsel and Director, FBL
Investment Advisory Services, Inc. and FBL Marketing Services, Inc.;
Director, Computer Aided Design Software, Inc. and Iowa Business
Development Finance Corporation; Chairman, Edge Technologies, Inc.
THOMAS R. GIBSON, EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER (51)
Executive Vice President and General Manager, Farm Bureau Multi-State
Services, Inc., Farm Bureau Life Insurance Company, Universal Assurors Life
Insurance Company, Western Farm Bureau Life Insurance Company, Farm Bureau
Mutual Insurance Company, Utah Farm Bureau Insurance Company, FBL Insurance
Brokerage, Inc., FBL Financial Services, Inc. and South Dakota Farm Bureau
Mutual Insurance Company ; Executive Vice President, General Manager and
Director, FBL Investment Advisory Services, Inc. and FBL Marketing
Services, Inc.
TIMOTHY J. HOFFMAN, VICE PRESIDENT, CHIEF MARKETING OFFICER (45)
Vice President, Chief Marketing Officer, Farm Bureau Multi-State Services,
Inc., Farm Bureau Life Insurance Company, Universal Assurors Life Insurance
Company, Western Farm Bureau Life Insurance Company, Farm Bureau Mutual
Insurance Company, Utah Farm Bureau Insurance Company, FBL Financial
Services, Inc., South Dakota Farm Bureau Mutual Insurance Company and FBL
Insurance Brokerage, Inc. ; President and Director, FBL Marketing Services,
Inc. and FBL Education Services, Inc.; Vice President, Chief Marketing
Officer and Director, FBL Investment Advisory Services, Inc.
WILLIAM J. ODDY, VICE PRESIDENT, CHIEF OPERATING OFFICER AND ASSISTANT GENERAL
MANAGER (51)
Vice President, Chief Operating Officer and Assistant General Manager, Farm
Bureau Multi-State Services, Inc., Farm Bureau Life Insurance Company,
Universal Assurors Life Insurance Company, Western Farm Bureau Life
Insurance Company, FBL Insurance Brokerage, Inc., Utah Farm Bureau
Insurance Company, Farm Bureau Mutual Insurance Company, South Dakota Farm
Bureau Mutual Insurance Company and FBL Financial Services, Inc.;
President, Treasurer and Director, Communications Providers, Inc.; Vice
President, Chief Operating Officer, Assistant General Manager, Treasurer
and Director, FBL Investment Advisory Services, Inc. and FBL Marketing
Services, Inc.; President and Director, FBL Real Estate Ventures, Ltd. and
RIK, Inc.
B-5
<PAGE>
RICHARD D. WARMING, VICE PRESIDENT, CHIEF INVESTMENT OFFICER (62)
Vice President, Chief Investment Officer and Assistant Treasurer, Farm
Bureau Multi-State Services, Inc., Farm Bureau Life Insurance Company,
Universal Assurors Life Insurance Company, Western Farm Bureau Life
Insurance Company, FBL Insurance Brokerage, Inc., Utah Farm Bureau
Insurance Company, FBL Financial Services, Inc., Farm Bureau Mutual
Insurance Company Western Agricultural Insurance Company, Western Farm
Bureau Mutual Insurance Company and South Dakota Farm Bureau Mutual
Insurance Company, ; President and Director, FBL Leasing Services, Inc. and
FBL Investment Advisory Services, Inc.; Vice President, Chief Investment
Officer and Director, FBL Marketing Services, Inc.; Vice President,
Secretary and Director, RIK, Inc.; Secretary and Director, FBL Real Estate
Ventures, Ltd.
DENNIS M. MARKER, INVESTMENT VICE PRESIDENT, ADMINISTRATION AND ASSISTANT
SECRETARY (44)
Investment Vice President, Administration, Farm Bureau Life Insurance
Company, Universal Assurors Life Insurance Company, Western Farm Bureau
Life Insurance Company, FBL Insurance Brokerage, Inc., Farm Bureau Mutual
Insurance Company, Utah Farm Bureau Insurance Company and South Dakota Farm
Bureau Mutual Insurance Company; Vice President and Director, FBL Leasing
Services, Inc; Investment Vice President, Administration, Secretary and
Director, FBL Investment Advisory Services, Inc. and FBL Marketing
Services, Inc.
SUE A. CORNICK, MARKET CONDUCT AND MUTUAL FUNDS MANAGER AND ASSISTANT SECRETARY
(35)
Market Conduct and Mutual Funds Manager and Assistant Secretary, FBL
Investment Advisory Services, Inc. and FBL Marketing Services, Inc.
KRISTI ROJOHN, ASSISTANT SECRETARY (32)
Senior Compliance Assistant and Assistant Secretary, FBL Investment
Advisory Services, Inc. and FBL Marketing Services, Inc.
B-6
<PAGE>
ELAINE A. FOLLOWWILL, ASSISTANT SECRETARY (25)
Compliance Assistant and Assistant Secretary, FBL Investment Advisory
Services, Inc. and FBL Marketing Services, Inc.
DONALD G. BARTLING, DIRECTOR (68)
Box 104
Herman, Nebraska 68029
Farmer; Partner, Bartling Brothers Partnership (farming business) and BBK
(farming partnership); Director, Papio Missouri River Natural Resources
District.
JOHN R. GRAHAM, DIRECTOR (50)
1512 Country Club Place
Manhattan, Kansas 66502
Executive Vice President, Kansas Farm Bureau, Kansas Farm Bureau Services,
Kansas Agricultural Marketing Association, FB Services Insurance Agency,
Kansas Farm Bureau Life Insurance Company, The Farm Bureau Mutual Insurance
Company, Inc., Kansas Farm Bureau Reinsurance Company, Inc. and KFB
Insurance Company, Inc.; Chairman, Chief Executive Officer and Director, FB
Capital Management, Inc. of Kansas; Director, National Association of
Independent Insurers, Didde Corporation, Farm Bureau Mutual Insurance
Agency of Kansas and Kansas State Travel Agency, Inc.; Partner, Arthur-
Graham Rental Properties, CM Brass and G&H Real Estate Investments;
Trustee, Master Teacher Employee Benefit Pension Trust.
ERWIN H. JOHNSON, DIRECTOR (52)
1841 March Avenue
Charles City, Iowa 50616
Farmer; Owner and Manager, Center View Farms Co.; Director, First Security
Bank and Trust Co., Charles City, Iowa; Farm Associate, Iowa State
University Cooperative Extension Service; Voting Delegate, Former
President and Director, Floyd County Farm Bureau.
ANN JORGENSEN, DIRECTOR (55)
R.R. 1, Box 43
Garrison, Iowa 52229
Private Investor; Farm and Business Management; Partner, Jorg-Anna Farms;
President and Founder, Farm Home Offices; Vice President, Timberlane Hogs
Limited; Director, Iowa Department of Economic Development; Chairperson,
Rural
B-7
<PAGE>
Development Council; Member, Iowa Agriculture Products Advisory
Council; Secretary, Iowa Public Television Foundation, Iowa Freedom
International Foundation, Friends of the U.I.H.C.; Former Director and
Chairperson, Iowa's Alcoholic Beverage Control Commission; Former Regent,
State of Iowa Board of Regents; Former Director, Iowa Public Television and
University of Iowa Hospitals and Clinics.
DALE W. NELSON, DIRECTOR (76)
4216 Patricia Drive
Des Moines, Iowa 50322
Retired; Former Executive Director and Secretary-Treasurer, Iowa Farm
Bureau Federation and affiliated companies; Former Senior Vice President,
Secretary- Treasurer and Director of the Fund and FBL Series Fund, Inc.
CURTIS C. PIETZ, DIRECTOR (64)
R. R. 3, Box 79
Lakefield, Minnesota 65150
Farmer; Director and Part Owner, Storden Seed and Chemical Service, Inc.;
Director, Minnesota Rural Finance Authority; Former Program Evaluator,
Minnesota Department of Vocational Education; Former President, Jackson
County Farm Bureau; Former Chairman and Director, Southwest Farm Management
Association; Director, F.C.S.
The officers and directors of the Fund also serve in similar capacities as
officers and directors of FBL Series Fund, Inc. and as officers and trustees of
FBL Variable Insurance Series Fund. Several of the officers and directors of
the Fund are also officers and directors of the Adviser. The Fund pays no
direct remuneration to any officer of the Fund. Each of the directors who is
not affiliated with the Adviser receives a fee of $115 plus expenses from the
Fund for each directors' meeting attended. For the fiscal year ended July 31,
1995, directors' fees paid by the Fund totalled $2,580.
The following table sets forth the compensation received by all Directors
of the Fund for the fiscal year ended July 31, 1995. The information in the
last column of the table sets forth the total compensation received by all
Directors for calendar year 1994 for service as a Director of the Fund and other
funds in the FBL Family.
<TABLE>
<CAPTION>
Pension and
Retirement
Aggregate Benefits Accrued Total Compensation
Compensation as Part of Fund from all funds in the
Name of Director From the Fund Expenses FBL Family
- ---------------- ------------- ---------------- ---------------------
B-8
<PAGE>
<S> <C> <C> <C>
Donald G. Bartling $ 430 0 $ 1,200
John R. Graham 430 0 1,200
Erwin H. Johnson 430 0 1,200
Ann Jorgensen 430 0 1,200
Eugene R. Maahs 0 0 0
Stephen M. Morain 0 0 0
Dale W. Nelson 430 0 1,200
Curtis C. Pietz 430 0 1,200
Merlin D. Plagge 0 0 0
</TABLE>
As of October 31, 1995, the directors and officers as a group owned less
than 1% of the then outstanding shares of the Fund, and no shareholder of record
owned 5% or more of the Fund's outstanding shares.
INVESTMENT OBJECTIVE AND POLICIES
The following information supplements the information set forth in the
Prospectus under the caption "INVESTMENT OBJECTIVE AND POLICIES."
It is the Fund's intention, as a general policy, to hold securities to
maturity. Nevertheless, the Fund may sell portfolio securities prior to
maturity in order to realize gains or losses or to shorten the average maturity
and may reduce or withhold dividends if it deems such actions appropriate to
maintain a stable net asset value. In addition, the Fund may attempt, from time
to time, to increase its yield by trading to take advantage of variations in the
markets for short-term money market instruments. Redemptions of Fund shares
could also necessitate the sale of portfolio securities at times when such sales
would not be otherwise desirable. While the Fund intends to invest in high
quality money market instruments, these investments are not entirely without
risk. An increase in interest rates will generally reduce the market value of
the Fund's portfolio investments and a decline in interest rates will generally
increase the value of the Fund's portfolio investments. Securities which are
not issued or guaranteed by the U.S. Government are subject to the possibility
of default by the issuer. Those obligations having the maximum degree of
security tend to have proportionately lower yields. Since the Fund's assets
will be invested in securities with short maturities and the Fund will manage
its portfolio as described above, the Fund's portfolio of money market
instruments may be expected to turn-over several times a year. Since securities
with maturities of less than one year are excluded from required portfolio
turnover calculations, the Fund's portfolio turnover rate for reporting purposes
is zero. Of course, there can be no assurance that the Fund will achieve its
objective.
B-9
<PAGE>
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the earlier
of the close of the New York Stock Exchange or 3:00 p.m. (Central Time), on each
day the Exchange is open for business, except the Tuesday after Christmas and
the day after Thanksgiving, and on each other day on which there is a sufficient
degree of trading in the Fund's investments that it might affect the net asset
value, except that the net asset value will not be computed on a day when no
orders for purchase or redemption of shares are received. If the Fund offices
should be closed because of a weather-related or comparable type of emergency,
and the Fund is unable to segregate orders and redemption requests received on
the emergency closed day, then the Fund will price those orders and redemptions
at the net asset value next determined. The Fund's net asset value is computed
by dividing the total value of the Fund's securities and other assets, less
liabilities (including dividends payable), by the number of Fund shares
outstanding. The net asset value per share is ordinarily $1.00. The Fund's
total assets are determined by valuing the portfolio securities at amortized
cost, pursuant to Rule 2a-7 under the Investment Company Act of 1940. While
this method provides certainty in valuation, it may result in periods during
which the value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold its portfolio securities. Under the
direction of the Board of Directors, certain procedures have been adopted to
monitor and stabilize the price per share. Calculations are made to compare the
value of the Fund's portfolio valued at amortized cost with market values.
Market valuations are obtained by using actual quotations provided by market
makers, estimates of market value, or values obtained from yield data relating
to classes of money market instruments published by reputable sources at the
mean between the bid and asked prices for those instruments. If a deviation of
1/2 of 1% or more were to occur between the Fund's $1.00 per share net asset
value and the net asset value calculated by reference to market valuations, or
if there were any other deviation which the Board of Directors believed would
result in dilution or other unfair results material to shareholders or
purchasers, the Board of Directors would promptly consider what action, if any,
should be initiated. The Fund reserves the right to calculate or estimate the
net asset value more frequently than once a day if deemed desirable.
The market value of debt securities usually reflects yields generally
available on securities of similar quality. When yields decline, the market
value of a portfolio holding higher yielding securities increases; and when
yields increase, the market value of the portfolio invested at lower yields can
be expected to decline. In addition, if the Fund has net redemptions at a time
when interest rates have increased, the Fund may have to sell portfolio
securities prior to maturity at a price below the Fund's carrying value. Also,
because the portfolio generally will be valued at amortized cost rather than
market, any yield quoted may be different if the entire portfolio were valued at
market since amortized cost does not take market fluctuations into
consideration.
B-10
<PAGE>
CALCULATION OF FUND'S YIELD
The Fund's yield is computed in accordance with a standard method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the yield quotation is based on a seven-day period and is computed as
follows: The Fund's net investment income per share (accrued interest on
portfolio securities, plus or minus amortized premium or discount, less accrued
expenses) is divided by the price per share (expected to remain constant at
$1.00) at the beginning of the period ("base period return") and the result is
divided by seven and multiplied by 365. The resulting yield figure is carried
to the nearest one-hundredth of one percent. Realized capital gains or losses
and unrealized appreciation or depreciation of investments are not included in
the calculation. The Fund's yield for the seven-day period ended July 31, 1995
was 4.39%.
The Fund's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of the assumed
compounding. The formula for the effective yield is (base period return
+1)to the power of(365/7) - 1. The Fund's effective yield for the seven-day
period ended July 31, 1995 was 4.49%.
The Fund's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in the Fund will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in the Fund is held, but also on such matters as any
realized gains and losses, unrealized appreciation and depreciation and changes
in Fund expenses.
RETIREMENT PLANS
The Fund offers a variety of retirement investment programs whereby
contributions are invested in shares of the Fund, and any dividends (and capital
gain distributions, if any) are reinvested in additional full and fractional
shares of the Fund. The Fund has waived the minimum investment requirement for
an account opened under any of these programs and subsequent investments can be
in any amount (subject to plan limitations).
SELF-EMPLOYED INDIVIDUAL RETIREMENT PLANS
The Fund has available for self-employed individuals a form of Paired
Defined Contribution Plan, Trust Agreement and related Custodial Agreement
(Keogh Plan) under IRS approved prototypes. A self-employed individual has
complete discretion to make his or her own fee arrangements with the custodial
bank of his or her selection, instead of using the custodian named herein on the
terms described under "General" below. The maximum annual tax deductible amount
for contributions is generally the lesser of 25% of earned income or $30,000.
For further details, including the right of appointing a successor custodian,
refer to the Plan, Trust Agreement and Custodial Agreement available from the
Fund.
B-11
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNTS
The Fund has available Individual Retirement Accounts (IRAs) under IRS
approved prototypes. A full $2,000 deduction for IRA contributions is
available only to (1) taxpayers who are not active participants in an employer-
sponsored retirement plan and (2) taxpayers who are active participants in an
employer-sponsored plan, but have adjusted gross income below a specified level.
For these purposes, a taxpayer will generally be deemed to be an active
participant in an employer-sponsored retirement plan if for any part of the
taxable year either the employee or his or her spouse is an active participant
under a qualified pension plan, a qualified profit sharing or money purchase
plan, a 403(b) annuity program, a Simplified Employee Pension plan, or a
government plan (other than a plan maintained for state and local employees
under section 457 of the Internal Revenue Code). Married taxpayers filing a
joint return who are active participants in an employer-sponsored plan may make
a tax deductible IRA contribution of up to $2,000 ($2,250 spousal) if their
adjusted gross income is $40,000 or less. Between $40,000 and $50,000 of
adjusted gross income, the IRA deduction is phased-out. For single taxpayers
who are active participants in an employer-sponsored plan, the $2,000 deductible
IRA contribution is similarly phased-out between $25,000 and $35,000 of adjusted
gross income. To the extent the IRA deduction is reduced or eliminated by the
phase-out rule, an individual may elect to make nondeductible IRA contributions
that, when combined with the deductible contributions, may not exceed $2,000
($2,250 for a spousal IRA). The income on the IRA contribution will not be
taxed until withdrawn.
For a period of seven days after establishment of an IRA Account and
receipt of a disclosure statement, the investor may revoke his or her
application and the full payment made to the Account will be returned. Form
5305-A, available from the Distributor, FBL Investment Advisory Services, Inc.,
5400 University Avenue, West Des Moines, Iowa 50266, is to be used to establish
an Account. The form should be consulted for detailed information, including
circumstances under which redemption requests must be accompanied by a
declaration of intent as to the disposition of the amount distributed.
TAX-SHELTERED 403(b) PLANS
The Fund has available Tax-Deferred Plans under section 403(b) of the
Internal Revenue Code. Certain tax-exempt organizations and public schools may
establish such plans under which they will be able to make contributions which
are not currently taxable to their employees. For further details, contact the
Fund.
CORPORATE PENSION AND PROFIT SHARING PLANS
Accounts for corporate pension and profit sharing plans (IRS approved
prototypes as well as other plans) are available. For further details, contact
the Fund.
B-12
<PAGE>
PUBLIC EMPLOYER DEFERRED COMPENSATION PLANS
Employees of state, county and municipal agencies may make investments with
pre-tax dollars through eligible deferred compensation plans authorized under
section 457 of the Internal Revenue Code. Contributions and earnings are tax-
sheltered until the funds are actually paid to the employee. Plans and
Administrative Services are available to states, counties and municipalities to
provide a tax-sheltered program for employees. For further details, contact the
Fund.
GENERAL
Investors Fiduciary Trust Company of Kansas City, Missouri, serves as
custodian and provides the services required for Keogh Plans, Individual
Retirement Plans, section 403(b) Plans and corporate pension and profit sharing
plans. An annual maintenance fee, currently $10, will be collected annually by
redemption of shares or fractions thereof from each participant's account. FBL
Investment Advisory Services, Inc. performs plan services for a portion of the
fee and during the fiscal year ended July 31, 1995 received $1,210 for its
services. Unusual administrative responsibilities will be subject to such
additional charges as will reasonably compensate the custodian for the service
involved.
Since a retirement investment program involves a commitment covering future
years, it is important that the investor consider his or her needs and whether
the investment objective of the Fund as described in the Prospectus is likely to
fulfill them. Premature termination or curtailment of the plan may result in
adverse tax consequences. Consultation with an attorney or other tax adviser
regarding these plans is recommended. For further information regarding these
plans, contact the Fund.
REDEMPTIONS
The Fund may suspend the right of redemption or postpone the date of
payment during any period when (a) trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission or such
Exchange is closed for trading (other than customary weekend and holiday
closings); (b) an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which (i) disposal by the Fund of securities owned by
it is not reasonable or practicable, or (ii) it is not reasonably practicable
for the Fund to determine fairly the value of its net assets; or (c) the
Securities and Exchange Commission by order permits such suspension for the
protection of the Fund's investors. In such event, redemption will be effected
at the net asset value next determined after the suspension has been terminated
unless the shareholder has withdrawn the redemption request in writing and the
request has been received by FBL Investment Advisory Services, Inc., 5400
University Avenue, West Des Moines, Iowa 50266, prior to the day of such
determination of net asset value.
B-13
<PAGE>
INVESTMENT ADVISER
The following information supplements the information set forth in the
Prospectus under the caption "MANAGEMENT OF THE FUND." Pursuant to an
Investment Advisory and Management Services Agreement dated February 23, 1981
(the "Agreement"), FBL Investment Advisory Services, Inc. ("FBL" or "Adviser"),
acts as the Fund's investment adviser and manager subject to the supervision of
the Fund's Board of Directors. FBL has served as investment adviser and manager
since the Fund commenced operations in March, 1981. FBL is a wholly-owned
subsidiary of FBL Financial Services, Inc., which is a wholly-owned subsidiary
of Farm Bureau Life Insurance Company, an Iowa insurance company, which is a
wholly-owned subsidiary of Farm Bureau Multi-State Services, Inc., an Iowa
corporation, 64% of whose outstanding voting shares are in turn owned by Iowa
Farm Bureau Federation, an Iowa not-for-profit corporation. The Adviser also
acts as the investment adviser to individuals, institutions and two other mutual
funds: FBL Series Fund, Inc. and FBL Variable Insurance Series Fund. Personnel
of the Adviser also manage investments for the portfolios of insurance
companies.
The Adviser subscribes to leading bond information services and receives
published reports and statistical compilations from issuers directly, as well as
analyses from brokers and dealers who may execute portfolio transactions for the
Fund or the Adviser's other clients. The Adviser regards this information and
material, however, as an adjunct to its own research activities.
Under the Agreement, the Adviser handles the investment and reinvestment of
the Fund's assets and provides for the Fund, at the Adviser's expense, office
space and facilities, simple business equipment, advisory, research and
statistical facilities, clerical services and personnel as may be necessary to
administer the business affairs of the Fund. The Adviser also has agreed to
arrange for any of its officers and directors to serve without salary as
directors, officers or agents of the Fund if duly elected to such positions.
As compensation for the investment advisory and management services and the
aforementioned facilities and administrative services to be provided by the
Adviser, the Fund has agreed to pay the Adviser an annual management fee,
accrued daily and payable monthly, on a graduated basis of .50% of the first
$200 million of average daily net assets, .40% on the next $200 million of
average daily net assets, .35% on the next $200 million of average daily net
assets and .30% of average daily net assets over $600 million. For the fiscal
years ended July 31, 1995, 1994 and 1993 the Fund's investment advisory and
management fee expense was $96,398, $106,225 and $139,928, respectively.
The Adviser is not required to pay expenses of the Fund other than as set
forth above. The Fund pays such other expenses, which include net asset value
calculations; portfolio transaction costs; interest on Fund obligations; stock
certificates; miscellaneous reports; membership dues; all expenses of
registration of its shares under federal and state
B-14
<PAGE>
securities laws; all expenses of Shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, reports and notices to
shareholders; investor services (including allocable telephone and personnel
expenses incurred by the Adviser); all taxes and fees payable to federal, state
or other governmental authorities; the fees and expenses of independent
auditors, legal counsel, custodian, transfer and dividend disbursing agent and
any fees of Directors who are not affiliated with the Adviser; insurance
premiums for fidelity bond and other coverage of the Fund's operations.
However, the Adviser has agreed that the management fee will be reduced, or it
will reimburse the Fund, by any amount necessary to prevent the Fund's total
expenses (including the management fee but excluding brokerage, interest, taxes
and extraordinary expenses) from exceeding the most restrictive limit on
expenses prescribed by any state in which Fund shares are offered for sale. The
reduction or reimbursement, however, shall not exceed the amount of the advisory
fee for such period. It is Management's understanding that no state in which
Fund shares are currently offered for sale presently imposes an expense
limitation.
The Agreement continues in effect from year-to-year as long as its
continuation is approved annually by vote of a majority of the Fund's
outstanding shares or by its Board of Directors, including, in either event, a
majority of those directors who are not parties to such agreement or "interested
persons" (as such term is defined in the Investment Company Act of 1940) of any
such party except in their capacity as directors of the Fund. It may be
terminated without penalty at any time upon 60 days' notice by the Adviser, or
by the Fund by vote of the Fund's Board of Directors, or by a majority vote of
the Fund's outstanding shares and would terminate automatically upon assignment.
The Agreement may be amended only with the approval of a majority of the
outstanding voting securities of the Fund.
The Agreement provides that the Adviser shall not be liable for error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with matters to which the Agreement relates, except loss resulting from bad
faith, gross negligence or willful misfeasance of the Adviser.
PORTFOLIO TRANSACTIONS: Purchases and sales of portfolio securities are
normally principal transactions. Portfolio securities are normally purchased
directly from the issuer or from an underwriter or market maker for the
securities. There are usually no brokerage commissions paid by the Fund for
such purchases and none were paid during the last three fiscal years. Purchases
from underwriters will include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked prices. The primary consideration in the
allocation of transactions is the most favorable price and execution of orders.
Subject to this primary consideration, while there is no understanding or
arrangement to do so, FBL may place the Fund's portfolio transactions with firms
that furnish research, statistical and other services. FBL regards information
which is customarily available only in return for brokerage as among the many
elements to be considered in determining
B-15
<PAGE>
placement of securities transactions. No specific value can be determined for
most such information and services and they are deemed supplemental to FBL's own
efforts in the performance of its duties under the investment advisory
agreement. Any research benefits derived are available for all clients of FBL.
The investment decisions for the Fund are reached independently from those
for the other mutual funds and other clients whose investments are managed by
FBL. Such other clients may also make investments in money market instruments
at the same time as the Fund. When both the Fund and one or more of such
clients have amounts available for investment in money market instruments,
available investments are allocated as to amount in a manner considered
equitable to each. In some cases, this procedure may affect the size or price
of the position obtainable for the Fund. It is the opinion of the Board of
Directors that the benefits available because of FBL's organization outweigh any
disadvantages that may arise from exposure to simultaneous transactions.
Purchase and sale orders for the Fund may be combined with those of other
clients of the Adviser in the interest of the most favorable net results to the
Fund.
Messrs. Morain, Gibson, Hoffman, Marker, Oddy, Warming and Mses. Cornick,
Rojohn and Followwill, directors and/or officers of the Fund, are also directors
and/or officers of FBL as indicated under "MANAGEMENT OF THE FUND" in the
Prospectus.
UNDERWRITING AND DISTRIBUTION
Pursuant to an underwriting agreement dated December 31, 1983, FBL
Investment Advisory Services, Inc. (the "Distributor") serves as principal
underwriter and sole distributor of the Fund's shares, acting as the exclusive
agent of the Fund in the sale of its shares to securities dealers who in turn
sell the shares to the public. The Distributor has agreed to use its best
efforts to distribute shares of the Fund. The Distributor pays expenses
incident to the sale and distribution of Fund shares, including preparation and
distribution of literature relating to the Fund and its investment performance,
and circulation of advertising and public relations material.
The terms of termination and assignment under the underwriting agreement
are the same as those under the investment advisory agreement except that
termination for reasons other than assignment of the agreement requires six
months' notice.
The Fund bears the expenses of registration of its shares with the
Securities and Exchange Commission and the cost of qualifying and maintaining
the qualification of the Fund's shares under securities laws of the various
states. The Fund also pays expenses incident to the issuance of its shares,
such as the cost of certificates, issue taxes and transfer and dividend
disbursing fees.
B-16
<PAGE>
OTHER INFORMATION
CUSTODIAN:
Bankers Trust Company, 16 Wall Street, New York, New York 10005 currently
serves as custodian of all cash and securities owned by the Fund. The custodian
performs no managerial or policy-making functions for the Fund.
INDEPENDENT AUDITORS:
The Fund's independent auditors are Ernst & Young LLP, 801 Grand Avenue,
Suite 3400, Des Moines, Iowa 50309. The independent auditors audit and report
on the Fund's annual financial statements, review certain regulatory reports and
perform other professional accounting, auditing, tax and advisory services when
engaged to do so by the Fund.
ACCOUNTING SERVICES:
The Fund has entered into an accounting services agreement with FBL
Investment Advisory Services, Inc. pursuant to which FBL performs accounting
services for the Fund. In addition, the Agreement provides that FBL shall
calculate the Fund's net asset value in accordance with the Fund's current
Prospectus and to prepare for Fund approval and use various tax returns and
other reports. For such services, the Fund pays FBL an annual fee, payable
monthly, of .05% of the Fund's average daily net assets, with the annual fee
payable by the Fund not to exceed $30,000. During the fiscal year ended July
31, 1995, the aggregate amount of such fees paid to FBL was $9,640.
SHAREHOLDER SERVICE, DIVIDEND DISBURSING AND TRANSFER AGENT:
FBL Investment Advisory Services, Inc. serves as the Fund's Shareholder
Service, Dividend Disbursing and Transfer Agent. FBL in turn has contracted
with DST Systems, Inc. ("DST"), an unrelated party, to perform certain services
incident to the maintenance of shareholder accounts. The Fund pays FBL an
annual fee of $9.00 per account and miscellaneous activity fees plus out-of-
pocket expenses, a portion of which is paid to DST. During the fiscal year
ended July 31, 1995, the aggregate amount of such fees paid to FBL was $107,130
of which $47,035 was paid to DST.
FINANCIAL STATEMENTS
The Fund's audited financial statements, including the notes thereto,
contained in the Annual Shareholder Report for the fiscal year ended July 31,
1995, are incorporated herein by reference. A copy of such Annual Shareholder
Report may be obtained without charge by contacting the Fund.
B-17
<PAGE>
--------------------------
Farm Bureau Mutual Funds
[LOGO]
FARM BUREAU MUTUAL FUNDS
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
737-128(95)
FBL Money
Market Fund, Inc.
[LOGO]
ANNUAL REPORT
JULY 31, 1995
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
FBL INVESTMENT ADVISORY
SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800-422-3175 (IN IOWA)
225-5586 (DES MOINES)
This report is not to be distributed
unless preceded or accompanied by
a prospectus.
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder,
During this recent spring, economic indicators pointed to a slowing economy
and weaknesses in both the manufacturing and consumer sectors. In response, and
to create a soft landing for the U.S. economy, the Fed funds rate was dropped 25
basis points by the Federal Reserve Board on July 5. (Prior to this, the Fed had
increased rates a total of 250 basis points to keep inflation under control.)
Although some economists argue the Fed will follow this downward move with
another, they have not acted since and are carefully watching economic
statistics which indicate the strength of the economy. With a current Fed funds
rate of 5.75% and a 30-year Treasury bond yielding 6.51%, there are many
believers in lower rates. Historically, this is a tight range which implies
either a lower Fed funds rate or higher Treasury rates.
Whatever direction the economy takes, your Fund will endeavor to provide an
attractive investment vehicle for your cash management needs. As a shareholder,
you can take advantage of the many services offered by FBL Money Market Fund,
Inc. Our goal remains the same: to maximize current income and liquidity for our
shareholders while attempting to carefully monitor the risk profile of the
Fund's assets.
MERLIN D. PLAGGE
PRESIDENT
September 12, 1995
2
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............................. $19,125,173
Cash...................................................................... 848,634
Accrued interest receivable............................................... 50,595
Prepaid expense........................................................... 891
-----------
Total Assets.............................................................. $20,025,293
-----------
-----------
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable to FBL Investment Advisory Services, Inc............... $ 9,613
Accrued expenses........................................................ 38,876
-----------
Total Liabilities......................................................... 48,489
Net assets applicable to 19,976,804 shares of capital stock
outstanding (NOTE 4).................................................... 19,976,804
-----------
Total Liabilities and Net Assets.......................................... $20,025,293
-----------
-----------
NET ASSET VALUE PER SHARE................................................. $ 1.00
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest....................................................................... $1,067,571
EXPENSES
Paid to FBL Investment Advisory Services, Inc. (NOTE 3):
Investment advisory and management fees...................................... 96,398
Shareholder service, transfer and dividend disbursing agent fees............. 107,130
Accounting fees.............................................................. 9,640
Custodian fees................................................................. 97,255
Legal fees..................................................................... 19,028
Audit fees..................................................................... 8,500
Directors' fees and expenses................................................... 6,500
Reports to shareholders........................................................ 19,290
Registration fees.............................................................. 18,223
Miscellaneous.................................................................. 3,856
----------
Total Expenses................................................................. 385,820
Expense reimbursement (NOTE 3)................................................. (96,398)
----------
Net Expenses................................................................... 289,422
----------
Net Increase in Net Assets Resulting from Operations........................... $ 778,149
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income............................................................ $ 778,149 $ 405,462
DIVIDENDS TO SHAREHOLDERS FROM (NOTE 5)
Net investment income............................................................ (778,149) (405,462)
-------------- --------------
-0- -0-
CAPITAL SHARE TRANSACTIONS (NOTE 4).............................................. 1,050,045 (3,145,182)
-------------- --------------
Total Increase (Decrease) in Net Assets.......................................... 1,050,045 (3,145,182)
NET ASSETS
Beginning of year................................................................ 18,926,759 22,071,941
-------------- --------------
End of year...................................................................... $ 19,976,804 $ 18,926,759
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
FBL MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
----------- ---------- -----------
<S> <C> <C> <C>
COMMERCIAL PAPER (32.93%)
- -------------------------
NONDEPOSITORY INSTITUTIONS (24.42%)
American General Finance Corp., due 9/01/95........ 5.983% $1,000,000 $ 1,000,000
Deere (John) Capital Corp., due 8/16/95............ 5.889 980,000 980,000
Ford Motor Credit Corp., due 8/17/95............... 5.982 900,000 900,000
General Electric Capital Corp., due 8/03/95........ 6.011 1,000,000 1,000,000
Norwest Corp., due 8/17/95......................... 6.092 1,000,000 997,337
-----------
4,877,337
PETROLEUM & COAL PRODUCTS (8.51%)
Chevron Oil Finance Corp., due 9/13/95............. 5.600 800,000 800,000
Texaco, Inc., due 8/10/95.......................... 5.941 900,000 900,000
-----------
1,700,000
-----------
Total Commercial Paper............................... 6,577,337
UNITED STATES GOVERNMENT AGENCIES (62.81%)
- ------------------------------------------
Federal Home Loan Bank, due 9/22/95................ 5.760 1,000,000 991,860
Federal National Mortgage Assoc., due 8/10/95...... 5.914 1,200,000 1,198,253
Federal National Mortgage Assoc., due 8/15/95...... 5.710 1,400,000 1,396,941
Federal National Mortgage Assoc., due 8/17/95...... 5.711 2,500,000 2,493,757
Federal National Mortgage Assoc., due 8/29/95...... 5.928 5,500,000 5,475,101
Federal National Mortgage Assoc., due 9/22/95...... 5.715 1,000,000 991,924
-----------
12,547,836
-----------
Total Investments (95.74%)........................... 19,125,173
OTHER ASSETS LESS LIABILITIES (4.26%)
- -------------------------------------
Cash, receivable and prepaid expense, less accounts
payable and accrued expenses...................... 851,631
-----------
Total Net Assets (100.00%)........................... $19,976,804
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
FBL Money Market Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end, diversified management
investment company and operates in the mutual fund industry.
The Fund values investments at amortized cost, which approximates market.
Under the amortized cost method, a security is valued at its cost on the date of
purchase and thereafter is adjusted to reflect a constant amortization to
maturity of the difference between the principal amount due at maturity and the
cost of the investment to the Fund.
The value of the underlying securities serving to collateralize repurchase
agreements is marked to market daily. Should the value of the underlying
securities decline, the seller would be required to provide the Fund with
additional securities so that the aggregate value of the underlying securities
was at least equal to the repurchase price. If a seller of a repurchase
agreement were to default, the Fund might experience losses in enforcing its
rights. To minimize this risk, the investment adviser (under the supervision of
the Board of Directors) will monitor the creditworthiness of the seller of the
repurchase agreement and must find such creditworthiness satisfactory before the
Fund may enter into the repurchase agreement.
The Fund records investment transactions generally on the trade date. Net
realized gains and losses on sales of investments, if any, are determined on the
basis of identified cost. Interest income on interest bearing investments is
recognized on an accrual basis.
All of the Fund's net investment income and any realized gains and losses
(none through July 31, 1995) on portfolio investments are declared as dividends
daily to shareholders of record as of the preceding business day.
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments is
the same for both federal income tax and financial reporting purposes.
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with FBL Investment Advisory Services,
Inc. ("FBL Investment") relating to the management of the Fund and the
investment of its assets. Pursuant to these agreements, fees paid to FBL
Investment are as follows: (1) investment advisory and management fees, which
are based on the Fund's daily net assets, currently at an annual rate of 0.50%
for the first $200,000,000 average daily net assets; (2) shareholder service,
transfer and dividend disbursing agent fees, which are based on direct services
provided and expenses incurred by the investment adviser, plus an annual per
account charge of $12.00; and (3) accounting fees, which are based on the Fund's
daily net assets at an annual rate of 0.05%, with a maximum annual expense of
$30,000.
7
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
FBL Investment has agreed to reimburse the Fund annually for its total
expenses, excluding brokerage, interest, taxes and extraordinary expenses in
excess of 1.50% of the Fund's average daily net assets. The amount reimbursed,
however, shall not exceed the amount of the investment advisory and management
fees paid by the Fund for such period.
Certain officers and directors of the Fund are also officers of Farm Bureau
Life Insurance Company, the indirect parent of FBL Investment, and other
affiliated entities. At July 31, 1995, the following affiliated companies owned
shares in the Fund:
<TABLE>
<CAPTION>
AFFILIATE SHARES
- ------------------------------------------------------------------ ---------
<S> <C>
FBL Real Estate Ventures, Inc..................................... 378,087
FBL Investment Advisory Services, Inc............................. 374,784
Mutual Ventures of South Dakota, Inc.............................. 295,500
FBL Ventures of South Dakota, Inc................................. 149,403
FBL Insurance Brokerage, Inc...................................... 92,115
FBL Partners...................................................... 80,906
RIK, Inc.......................................................... 80,057
FBL Marketing Services, Inc....................................... 67,454
FBL Education Services, Inc....................................... 42,203
Farm Bureau Multi-State Services, Inc............................. 18,243
Iowa Agency Managers Association.................................. 5,752
Others............................................................ 2,921
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1995 consisted of:
<TABLE>
<S> <C>
Capital Stock (500,000,000 shares of $.001 par value Capital
Stock authorized)............................................ $ 19,977
Additional paid-in capital.................................... 19,956,827
-----------
Net Assets.................................................... $19,976,804
-----------
-----------
</TABLE>
8
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------
1995 1994
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................ 60,737,863 $ 60,737,863 70,595,627 $ 70,595,627
Shares issued in reinvestment of
dividends and distributions........... 769,139 769,139 393,021 393,021
-------------- --------------- -------------- ---------------
61,507,002 61,507,002 70,988,648 70,988,648
Shares redeemed........................ (60,456,957) (60,456,957) (74,133,830) (74,133,830)
-------------- --------------- -------------- ---------------
Net Increase (Decrease)................ 1,050,045 $ 1,050,045 (3,145,182) $ (3,145,182)
-------------- --------------- -------------- ---------------
-------------- --------------- -------------- ---------------
</TABLE>
5. DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income are declared daily and are payable on
the last business day of the month. Dividends for the year ended July 31, 1995
were paid as follows:
<TABLE>
<CAPTION>
PAYABLE DATE
- -------------------------------------------------------------------
<S> <C>
August 31, 1994.................................................... $ .0028
September 30, 1994................................................. .0026
October 31, 1994................................................... .0028
November 30, 1994.................................................. .0029
December 30, 1994.................................................. .0034
January 31, 1995................................................... .0039
February 28, 1995.................................................. .0035
March 31, 1995..................................................... .0039
April 28, 1995..................................................... .0035
May 31, 1995....................................................... .0041
June 30, 1995...................................................... .0037
July 31, 1995...................................................... .0038
---------
Total Dividends Per Share.......................................... $ .0409
---------
---------
</TABLE>
9
<PAGE>
FBL MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............ $1.000 $1.000 $1.000 $1.000 $1.000
Income From Investment Operations
Net investment income..................... 0.041 0.020 0.019 0.036 0.064
----------- ----------- ----------- ----------- -----------
Total from investment operations............ 0.041 0.020 0.019 0.036 0.064
----------- ----------- ----------- ----------- -----------
Less Distributions
Dividends (from net investment income).... (0.041) (0.020) (0.019) (0.036) (0.064)
----------- ----------- ----------- ----------- -----------
Total distributions......................... (0.041) (0.020) (0.019) (0.036) (0.064)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year.................. $1.000 $1.000 $1.000 $1.000 $1.000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total Return:
Total investment return based on net asset
value (1).................................. 4.17% 1.95% 1.91% 3.69% 6.59%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)..... $19,977 $18,927 $22,072 $33,511 $61,876
Ratio of net expenses to average
net assets................................. 1.51% 1.50% 1.50% 1.25% 0.93%
Ratio of net income to average net assets... 4.06% 1.92% 1.89% 3.75% 6.40%
Information assuming no voluntary
reimbursement by FBL Investment of excess
operating expenses (see NOTE 3):
Per share net investment income............. $0.036 $0.019 $0.019
Ratio of expenses to average net assets..... 2.01% 1.57% 1.54%
Amount reimbursed........................... $96,398 $6,978 $5,116
</TABLE>
- --------------------------
Note: Per share amounts have been calculated on the basis of monthly per share
amounts (using average monthly outstanding shares) accumulated for the
period.
(1) Total investment return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
SEE ACCOMPANYING NOTES.
10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
FBL Money Market Fund, Inc.
We have audited the accompanying statement of assets and liabilities of FBL
Money Market Fund, Inc., including the schedule of investments, as of July 31,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of FBL
Money Market Fund, Inc. at July 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Des Moines, Iowa
September 1, 1995
11
<PAGE>
FBL MONEY MARKET FUND, INC.
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(i) Financial Statements included in Part A of Registration Statement
Condensed Financial Information at July 31, 1995
(ii) Financial Statements included in Part B of Registration Statement
through incorporation by reference to the 1995 Annual Report to
Shareholders of FBL Money Market Fund, Inc.:
Report of Independent Auditors
Statement of Assets and Liabilities as of July 31, 1995
Statement of Operations for the year ended July 31, 1995
Statements of Changes in Net Assets for the years ended July 31,
1995 and 1994
Schedule of Investments at July 31, 1995
Notes to Financial Statements
(b) EXHIBITS
*1. Restated Articles of Incorporation of Registrant.(1)
*2. By-Laws of Registrant, as amended.(2)
- -----------------------------
* Filed herewith
(1) Previously filed with Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1, filed on or about February 26, 1981.
(2) Previously filed with Post Effective Amendment No. 7 to the Registration
Statement on Form N-1A, filed on or about November 27, 1987.
<PAGE>
3. Inapplicable.
*4. Specimen copy of certificate of the capital stock of Registrant, par value
$.001 per share.(3)
*5. Conformed copy of Investment Advisory and Management Agreement with
Registrant's Adviser.(3)
*6. (a) Conformed copy of Underwriting Agreement.(4)
(b) Conformed copy of Dealer Agreement.(4)
7. Inapplicable.
*8. Conformed copy of Custodian Agreement.
*9. (a) Fidelity Bond Joint Insureds Agreement.
(b) Joint Insureds D&O and E&O Agreement.
(c) Accounting Services Agreement.
(d) Shareholder Service, Dividend Disbursing and Transfer Agent Agreement.
10. Inapplicable.
*11. Consent of Ernst & Young LLP.
12. Inapplicable.
*13. Conformed copy of Subscription Agreement.(1)
*14. (a)(1) Prototype Money Purchase Pension and Profit Sharing Plan, as
amended.
(a)(2) Adoption Agreements.
(a)(3) Application Form for Keogh Plan.(5)
(b)(1) Model Individual Retirement Account.
(b)(2) Model IRA Disclosure Statement.
- -----------------------------
(3) Previously filed with Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1, filed on or about October 2, 1981.
(4) Previously filed with Post-Effective Amendment No. 4 to the Registration
Statement on Form N-1A, filed on or about October 2, 1984.
(5) Previously filed with Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A, filed on or about November 28, 1986.
C-2
<PAGE>
15. Inapplicable
16. Schedule for Computation of Performance Data.(6)
*27. Financial Data Schedules.
- -----------------------------
(6) Incorporated by reference from Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A, filed on or about November 30, 1988.
C-3
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable.
Item 26. NUMBER OF HOLDERS OF SECURITIES
As of October 31, 1995 there were 5,841 record holders of the sole class of
issued and outstanding capital stock of the Registrant, $.001 par value.
Item 27. INDEMNIFICATION
The Maryland Code, Corporations and Associations, Section 2-418 provides
for indemnification of directors, officers, employees and agents. Article IX
of the Registrant's Articles of Incorporation restricts indemnification for
officers and directors in cases of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Article XV of the Registrant's By-Laws also provides for
indemnification under certain circumstances.
The Investment Advisory and Management Services Agreement between the
Registrant and FBL Investment Advisory Services, Inc. ("Adviser") provides
that, in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties thereunder on the part of the
Adviser, the Adviser shall not be liable for any error of judgment or mistake
of law, or for any loss suffered by the Fund in connection with the matters
to which such Agreement relates.
In addition, the Registrant maintains a directors and officers "errors
and omissions" liability insurance policy under which the Registrant and its
directors and officers are named insureds.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
C-4
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Registrant's investment adviser is FBL Investment Advisory Services,
Inc. ("FBL"). In addition to its services to Registrant as investment
adviser, underwriter, shareholder service, transfer and dividend disbursing
agent, all as set forth in Parts A and B of this Registration Statement on
Form N-1A, FBL acts as adviser, underwriter, shareholder service, transfer
and dividend disbursing agent for FBL Series Fund, Inc. and FBL Variable
Insurance Series Fund, diversified open-end series management investment
companies.
The principal occupations of the principal executive officers and
directors of FBL and their services as officers and employees of Farm Bureau
Multi-State Services, Inc. and its affiliates are disclosed below. The
address of Farm Bureau Multi-State Services, Inc. and its affiliates is 5400
University Avenue, West Des Moines, Iowa 50266.
<TABLE>
<CAPTION>
NAME AND POSITION(S)
WITH FBL PRINCIPAL OCCUPATIONS
- ------------------------------------------ ------------------------------------------
<S> <C>
Stephen M. Morain General Counsel and Assistant
Senior Vice President, General Counsel and Secretary, Iowa Farm Bureau
Director Federation; General Counsel, Secretary
and Director, Farm Bureau Management
Corporation; Senior Vice President and
General Counsel, Farm Bureau Multi-
State Services, Inc., Farm Bureau Life
Insurance Company, Universal Assurors
Life Insurance Company, Farm Bureau
Mutual Insurance Company, Utah Farm
Bureau Insurance Company, FBL Financial
Services, Inc., South Dakota Farm
Bureau Mutual Insurance Company and FBL
Insurance Brokerage, Inc.; Senior Vice
President, General Counsel, Assistant
Secretary and Director, FBL Series
Fund, Inc. and FBL Money Market Fund,
Inc.; Senior Vice President, General
Counsel, Assistant Secretary and
Trustee, FBL Variable Insurance Series
Fund; Senior Vice President, General
Counsel and Director, FBL Marketing
Services, Inc.; Director, Computer
Aided Design Software, Inc. and Iowa
Business Development Finance
Corporation; Chairman, Edge
Technologies, Inc.
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION(S)
WITH FBL PRINCIPAL OCCUPATIONS
- ------------------------------------------ ------------------------------------------
<S> <C>
Richard D. Warming, Vice President, Chief Investment
President and Director Officer and Assistant Treasurer, Farm
Bureau Multi-State Services, Inc., Farm
Bureau Life Insurance Company,
Universal Assurors Life Insurance
Company, Western Farm Bureau Life
Insurance Company, FBL Insurance
Brokerage, Inc., Utah Farm Bureau
Insurance Company, FBL Financial
Services, Inc., Farm Bureau Mutual
Insurance Company, Western Agricultural
Insurance Company, Western Farm Bureau
Mutual Insurance Company and South
Dakota Farm Bureau Mutual Insurance
Company; President and Director, FBL
Leasing Services, Inc.; Vice President,
Chief Investment Officer, FBL Series
Fund, Inc., FBL Money Market Fund, Inc.
and FBL Variable Insurance Series Fund;
Vice President, Chief Investment
Officer and Director, FBL Marketing
Services, Inc.; Vice President,
Secretary and Director, RIK, Inc.;
Secretary and Director, FBL Real Estate
Ventures, Ltd.
William J. Oddy, Vice President, Chief Operating Officer
Vice President, Chief and Assistant General Manager, Farm
Operating Officer, Bureau Multi-State Services, Inc., Farm
Assistant General Bureau Life Insurance Company,
Manager, Treasurer Universal Assurors Life Insurance
and Director Company, Western Farm Bureau Life
Insurance Company, FBL Insurance
Brokerage, Inc., Utah Farm Bureau
Insurance Company, Farm Bureau Mutual
Insurance Company, South Dakota Farm
Bureau Mutual Insurance Company, FBL
Financial Services, Inc., FBL Series
Fund, Inc., FBL Money Market Fund, Inc.
and FBL Variable Insurance Series Fund;
President, Treasurer and Director,
Communications Providers, Inc.; Vice
President, Chief Operating Officer,
Assistant General Manager, Treasurer
and Director, FBL Marketing Services,
Inc.; President and Director, FBL Real
Estate Ventures, Ltd. and RIK, Inc.
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION(S)
WITH FBL PRINCIPAL OCCUPATIONS
- ------------------------------------------ ------------------------------------------
<S> <C>
Dennis M. Marker, Investment Vice President,
Investment Vice Administration, Farm Bureau Life
President, Insurance Company, Universal Assurors
Administration, Life Insurance Company, Western Farm
Secretary and Bureau Life Insurance Company, FBL
Director Insurance Brokerage, Inc., Farm Bureau
Mutual Insurance Company, Utah Farm
Bureau Insurance Company and South
Dakota Farm Bureau Mutual Insurance
Company; Investment Vice President,
Administration and Assistant Secretary,
FBL Series Fund, Inc., FBL Money Market
Fund, Inc., and FBL Variable Insurance
Series Fund; Vice President and
Director, FBL Leasing Services, Inc;
Investment Vice President,
Administration, Secretary and Director,
FBL Marketing Services, Inc.
Thomas R. Gibson, Executive Vice President and General
Executive Vice Manager, Farm Bureau Multi-State
President, General Services, Inc., Farm Bureau Life
Manager and Director Insurance Company, Universal Assurors
Life Insurance Company, Western Farm
Bureau Life Insurance Company, Farm
Bureau Mutual Insurance Company, Utah
Farm Bureau Insurance Company, FBL
Insurance Brokerage, Inc., FBL
Financial Services, Inc., South Dakota
Farm Bureau Mutual Insurance Company,
FBL Series Fund, Inc., FBL Money Market
Fund, Inc. and FBL Variable Insurance
Series Fund; Executive Vice President,
General Manager and Director, FBL
Marketing Services, Inc.
Timothy J. Hoffman, Vice President, Chief Marketing
Vice President, Chief Officer, Farm Bureau Multi-State
Marketing Officer Services, Inc., Farm Bureau Life
and Director Insurance Company, Universal Assurors
Life Insurance Company, Western Farm
Bureau Life Insurance Company, Farm
Bureau Mutual Insurance Company, Utah
Farm Bureau Insurance Company, FBL
Financial Services, Inc.,
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION(S)
WITH FBL PRINCIPAL OCCUPATIONS
- ------------------------------------------ ------------------------------------------
<S> <C>
South Dakota
Farm Bureau Mutual Insurance Company,
FBL Insurance Brokerage, Inc., FBL
Series Fund, Inc., FBL Money Market
Fund, Inc. and FBL Variable Insurance
Series Fund; President and Director,
FBL Marketing Services, Inc. and FBL
Education Services, Inc.
</TABLE>
Item 29. PRINCIPAL UNDERWRITERS
(a) FBL Investment Advisory Services, Inc., the principal underwriter for
Registrant, also acts as the principal investment adviser,
underwriter, shareholder service, transfer and dividend disbursing
agent for FBL Series Fund, Inc. and FBL Variable Insurance Series
Fund, diversified, open-end series management investment companies.
(b) The principal business address of each director and principal officer
of the principal underwriter is 5400 University Avenue, West Des
Moines, Iowa 50266. See Item 28 for information on the principal
officers of FBL Investment Advisory Services, Inc., investment manager
and principal underwriter for the Registrant.
(c) Inapplicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of the Registrant and the offices of the Investment
Adviser, FBL Investment Advisory Services, Inc., 5400 University Avenue, West
Des Moines, Iowa 50266.
Item 31. MANAGEMENT SERVICES
Inapplicable.
Item 32. UNDERTAKINGS
Inapplicable.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it meets all of the
requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amended
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of West Des Moines and State of Iowa,
on the 28th day of November, 1995.
FBL MONEY MARKET FUND, INC.
By: /s/Merlin D. Plagge
---------------------------
Merlin D. Plagge, President
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to the registration statement has been signed below by the following
persons in the capacity and on the date indicated.
/s/Merlin D. Plagge President and Director November 28, 1995
- ---------------------- (Principal Executive Officer) -----------------
Merlin D. Plagge (dated)
/s/Eugene R. Maahs Eugene R. Maahs November 28, 1995
- ---------------------- Senior Vice President, -----------------
Eugene R. Maahs Secretary-Treasurer and (dated)
Director (Principal
Financial and Accounting
Officer)
/s/Stephen M. Morain Senior Vice President, November 28, 1995
- ---------------------- General Counsel, Assistant -----------------
Stephen M. Morain Secretary and Director (dated)
/s/Donald G. Bartling Director November 28, 1995
- ---------------------- -----------------
Donald G. Bartling* (dated)
/s/John R. Graham Director November 28, 1995
- ---------------------- -----------------
John R. Graham* (dated)
C-9
<PAGE>
/s/Erwin H. Johnson Director November 28, 1995
- ---------------------- -----------------
Erwin H. Johnson* (dated)
/s/Ann Jorgensen Director November 28, 1995
- ---------------------- -----------------
Ann Jorgensen* (dated)
/s/Dale W. Nelson Director November 28, 1995
- ---------------------- -----------------
Dale W. Nelson* (dated)
/s/Curtis C. Pietz Director November 28, 1995
- ---------------------- -----------------
Curtis C. Pietz* (dated)
*By /s/Stephen M. Morain Attorney-in-Fact, pursuant to
- ------------------------ Power of Attorney.
Stephen M. Morain
C-10
<PAGE>
INDEX TO EXHIBITS
*1. Restated Articles of Incorporation of Registrant.
*2. By-Laws of Registrant, as amended.
3. Inapplicable.
*
4. Specimen copy of certificate of the capital
stock of Registrant, par value $.001 per
share.
*5. Conformed copy of Investment Advisory and
Management Agreement with Registrant's
Adviser.
*6. (a) Conformed copy of Underwriting
Agreement.
(b) Conformed copy of Dealer Agreement.
7. Inapplicable.
*8. Conformed copy of Custodian Agreement.
*9. (a) Fidelity Bond Joint Insureds Agreement.
(b) Joint Insureds D&O an E&O Agreement.
(c) Account Services Agreement.
(d) Shareholder Service, Divided Disbursing
and Transfer Agent Agreement.
10. Inapplicable.
*11. Consent of Ernst & Young LLP.
12. Inapplicable.
*13. Conformed copy of Subscription Agreement.
*14. (a)(1) Prototype Money Purchase Pension
and Profit Sharing Plan.
(a)(2) Adoption Agreements.
(a)(3) Application Form for Keogh Plan.
(b)(1) Model Individual Retirement
Account.
(b)(2) Model IRA Disclosure Statement.
15. Inapplicable.
<PAGE>
16. Schedule of Computation of Performance Data.
*27. Financial Data Schedules.
* Filed herewith
<PAGE>
FBL MONEY MARKET FUND, INC.
RESTATEMENT OF CHARTER
FBL Money Market Fund, Inc. a Maryland corporation (hereinafter called the
"Corporation") having its principal office in the State of Maryland c/o The
Corporation Trust Incorporated, First Maryland Building, 25 South Charles
Street, Baltimore, Maryland 21201 and having The Corporation Trust Incorporated,
as its registered agent located at the First Maryland Building, 25 South Charles
Street, Baltimore, Maryland 21201, hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The corporation desires to restate its charter as currently in
effect and the charter is hereby restated to read as follows:
FIRST: INCORPORATION. The incorporator is Charles F. Custer, who is at
least eighteen years of age and whose address is Room 3000, 115 South
LaSalle Street, Chicago, Illinois 60603. He is forming the corporation
named in these articles of incorporation under the general laws of the
State of Maryland.
SECOND: NAME. The name of the corporation is FBL Money Market Fund, Inc.
THIRD: PURPOSES. The purposes for which the corporation is formed are:
To engage in the business of a registered open-end management investment
company, and to do any and all acts or things as are necessary, customary,
appropriate, convenient or incidental in connection therewith.
The foregoing clause shall be construed both as purposes and powers.
FOURTH: ADDRESS AND RESIDENT AGENT. The post office address of the
principal office of the corporation in the State of Maryland is c/o The
Corporation Trust Incorporated, First Maryland Building, 25 South Charles
Street, Baltimore, Maryland 21201. The name and post office address of the
resident agent of the corporation in the State of Maryland is The
Corporation Trust Incorporated, First Maryland Building, 25 South Charles
Street, Baltimore, Maryland 21201. The resident agent is a Maryland
corporation.
FIFTH: STOCK
A. AUTHORIZED STOCK. The total number of shares of stock which the
corporation shall have authority to issue is 500 million shares, $.001 par
value per share, such shares having an aggregate par value of $500,000.
Such shares may be issued as shares of a class designated Capital Stock, or
of any new class or classes, each consisting of such number of shares and
having such designation, such powers, preferences and rights and such
qualifications, limitations and restrictions as shall be fixed and
determined from time to time by resolution or resolutions providing for the
issuance of such stock adopted by the Board of Directors, to whom authority
so to fix and determine the same is hereby expressly granted.
<PAGE>
B. DIVIDEND OR DISTRIBUTIONS. Without limiting the generality of the
foregoing the dividends and distributions of investment income and capital
gains with respect to Capital Stock and with respect to each class that may
hereafter be created shall be in such amount as may be declared from time
to time by the board of directors, and such dividends and distributions may
vary from class to class to such extent and for such purposes as the board
of directors may deem appropriate, including, but not limited to, the
purpose of complying with requirements of regulatory or legislative
authorities.
C. CLASSIFICATION OF RECLASSIFICATION OF STOCK. The board of directors
is hereby expressly granted authority to (1) classify or reclassify any
unissued stock (whether now or hereafter authorized and whether of Capital
Stock or any other class) from time to time by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption of stock and (2) pursuant to such classification or
reclassification to increase or decrease the number of authorized shares of
any class, but the number of shares of any class shall not be decreased by
the board of directors below the number of shares thereof then outstanding
and the total number of authorized shares of stock shall not be increased
above 500 million shares except by amendment to the corporation's Articles
of Incorporation.
SIXTH: SALE, REDEMPTION AND REPURCHASE OF SHARES.
A.1. SALE OF SHARES. The board of directors may authorize the issuance and
sale from time to time of shares of capital stock, whether now or
hereafter authorized, for such consideration as the board of directors
considers advisable but not less than the net asset value of the shares
which is next computed after the time of receipt of an unconditional order
for the purchase of shares, except as may be permitted by or pursuant to
the Investment Company Act of 1940 and other applicable law.
A.2. FRACTIONAL SHARES. Stock may be issued in fractions of whole shares
to which attach pro rata all the rights of whole shares, including the
right to vote and to receive dividends, except that there shall be no right
to receive a certificate representing any fraction of a whole share; and
wherever the words "share" or "shares" are used in these articles, they
include fractions of shares where the context does not clearly indicate
that only full shares are intended.
B.1. REDEMPTION OF SHARES; GENERAL. Any stockholder of the corporation may
at any time require the corporation to redeem all or any part of the shares
of capital stock registered in the name of such stockholder, except as
specified below, at the net asset value of the shares which is next
computed after the time of receipt of an order for redemption of the shares
in good form.
B.2. FORM. An order for redemption in good form shall mean receipt by the
corporation or its designated agent of a written unconditional and
irrevocable instruction of the stockholder to redeem in form acceptable to
the
<PAGE>
corporation or its designated agent, together with any certificates which
may have been issued therefor, endorsed or accompanied by proper instrument
of transfer, and such other documents as the corporation or its designated
agent may require.
B.3. REDEMPTION PAYMENT. Payment for shares redeemed shall be made within
seven days after receipt of an order for redemption of the shares in good
form. However, the right of redemption of shares may be suspended, and the
payment for shares previously redeemed may be postponed, by or under the
authority of the board of directors for the whole or any part of any period
during which such suspension or postponement is permitted by the Investment
Company Act of 1940, or by rule or order of the Securities and Exchange
Commission pursuant to that Act.
B.4. REPURCHASE OF SHARES. The corporation may by agreement with any
stockholder repurchase shares of capital stock of the corporation at a
price not exceeding the net asset value in effect at the time when such
purchase or contract or purchase is made or the net asset value next to be
determined.
B.5. CORPORATION'S RIGHT TO REDEEM. The corporation shall have the right
at any time without prior notice to the stockholder to redeem shares of any
stockholder for their then current net asset value per share if at such
time the stockholder owns shares having an aggregate net asset value of
less than $1,000, subject to such terms and conditions as the board of
directors may approve, and subject to the corporation giving general notice
to all stockholders of its intention to avail itself of such right, either
by publication in the corporation's prospectus or by such other means as
the board of directors may determine.
B.6. RETIREMENT OF REDEEMED OR REPURCHASED SHARES. Any shares of its stock
redeemed or repurchased by the corporation directly or through its
principal underwriter, if any, or another agent designated for the purpose,
pursuant to the provisions of this article, shall be deemed retired and
shall thereafter have the status of authorized but unissued stock.
C. DETERMINATION OF NET ASSET VALUE. The net asset value shall be
determined as of such times as the board of directors shall prescribe by
resolution, subject to any applicable rules and regulations of the
Securities and Exchange Commission. In the absence of any such resolution
of the board of directors, the net asset value shall be determined as of
the time of the close of trading on the New York Stock Exchange on any day
on which that exchange is open for trading and there is a purchase or
redemption of shares of the corporation.
D. DETERMINATION OF NET ASSET VALUE OF SHARES. The net asset value of
each share of the corporation shall be determined by or under the authority
of the board of directors in accordance with the provisions of, and the
rules of the Securities and Exchange Commission under, the Investment
Company Act of 1940, and as to matters of accounting, in conformity with
generally accepted accounting principles. The board of directors may
appoint
<PAGE>
persons to assist it in the determination of the value of assets,
liabilities and net asset value per share, and to make the actual
calculations pursuant to the direction of the board of directors.
E. NO PREEMPTIVE RIGHTS. No holder of shares of the corporation, whether
now or hereafter authorized, shall be entitled as of right to acquire from
the corporation any shares of the corporation, whether now or hereafter
authorized.
SEVENTH: BY-LAWS. The board of directors is authorized to adopt, alter
and repeal the by-laws of the corporation, except to the extent that the
by-laws provide otherwise.
EIGHTH: MAJORITY VOTES OF STOCKHOLDERS. Notwithstanding any provision of
the general laws of the State of Maryland requiring approval by the
stockholders of any action by the affirmative vote of a greater proportion
than a majority of the votes entitled to be cast on the matter, any such
action may be taken or authorized upon the concurrence of at least a
majority of the aggregate number of votes entitled to be cast thereon.
NINTH: LIABILITY OF DIRECTORS AND OFFICERS. The directors and officers of
the corporation shall not be liable to the corporation or to any of its
stockholders or creditors because of any action taken by them in good
faith, and in taking any such action the directors and officers shall be
fully protected in relying in good faith upon the books of account of the
corporation or statements or reports prepared by any of its officials or
employees or by others who they believe in good faith are qualified to make
such statements or reports; provided that this sentence shall not protect
any director or officer of the corporation against any liability to the
corporation or to its stockholders to which he would otherwise be subject
by reasons of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
TENTH: BOARD OF DIRECTORS.
A. NUMBER. The number of directors of the corporation, until such number
shall be changed by the by-laws of the corporation, is eleven.
B. NAMES. The names of the persons who will serve as directors of the
corporation until the first annual meeting of stockholders and until their
successors are elected and qualify are as follows:
Dean R. Kleckner Robert B. Delano
Dale W. Nelson Bradley A. Judy
Edward F. Seitzinger Jack C. Lacey
Dean W. Mitchell Cecil H. Miller
Donald G. Bartling Alice V. Murray
Maynard Tollefson
<PAGE>
ELEVENTH: AMENDMENT OF ARTICLES OF INCORPORATION. The corporation
reserves the right to amend or repeal any provision contained in its
articles of incorporation in the manner now or hereafter prescribed by
statute, and any contract rights conferred upon the stockholders are
granted subject to this reservation.
SECOND: The provisions set forth in the articles of restatement are all
provisions of the charter currently in effect and the charter is not amended by
the articles of restatement.
THIRD: The restatement of the charter was approved by a majority of the
entire board of directors at a meeting duly convened and held on January 11,
1981. The number of directors of the corporation is eleven. The names of the
directors are:
Dean R. Kleckner Robert B. Delano
Dale W. Nelson Bradley A. Judy
Edward F. Seitzinger Jack C. Lacey
Dean W. Mitchell Cecil H. Miller
Donald G. Bartling Alice V. Murray
Maynard Tollefson
IN WITNESS WHEREOF, FBL Money Market Fund, Inc. has caused these presents
to be signed in its name and on its behalf by its President, and attested by its
Assistant Secretary on February 23, 1981.
FBL MONEY MARKET FUND, INC.
By:
--------------------------------------
Dean R. Kleckner
President
Attest:
- -------------------------------
William J. Oddy
Assistant Secretary
<PAGE>
THE UNDERSIGNED, President of FBL Money Market Fund, Inc., who executed on
behalf of said corporation the foregoing Restatement of Charter, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
------------------------------------------
Dean R. Kleckner
President
<PAGE>
BY-LAWS
OF
FBL MONEY MARKET FUND, INC.
ARTICLE I
SHAREHOLDERS MEETINGS
1. Meetings of the shareholders shall be held at such time and place
within, or without, the State of Maryland as may be determined by the board of
directors and designated in the notice of said meeting.
2. No meeting of the shareholders of this corporation shall be held
unless required by applicable law or otherwise determined by the board of
directors.
3. Meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the board of directors or the
president at any time, and shall be called by the president or secretary at the
request in writing of one or more shareholders holding at least twenty-five
percent (25%) (or ten percent (10%) if a purpose of the meeting is to determine
if a director is to be removed from office) of the common stock of the
corporation, then issued and outstanding and entitled to vote, requesting a
meeting be called for a purpose requiring action by the shareholders as provided
herein or in the Articles of Incorporation, which purpose shall be specified in
any such written application. Business transacted shall be confined to the
objects stated in the notice.
4. Written notice of every meeting of the shareholders, stating the time,
place and purpose or purposes for which the meeting is called, shall be given by
the secretary to each shareholder entitled to vote thereat and to any
shareholder entitled by law to such notice. Such notice shall be given to each
shareholder by mailing the same, postage prepaid, to the address of the
shareholder as it appears on the books of the corporation not less than ten (10)
nor more than ninety (90) days before the time fixed for such meeting.
5. The holders of a majority of the shares of common stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as may be otherwise
provided by statute. If such quorum shall not be present or represented at any
meeting of the shareholders, the shareholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, (provided no adjournment shall be to a date more than one hundred
and twenty (120) days after the original record date), without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
<PAGE>
6. When a quorum is present at any meeting, the vote of the holders of a
majority of the shares having the right to vote thereat, present in person or
represented by proxy, shall determine any question brought before such meeting,
unless the question is one upon which by express provision of the statutes,
articles of incorporation or these by-laws, a different vote is required in
which case such express provision shall control.
7. At any meeting of the shareholders every shareholder having the right
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing, subscribed by such shareholder and bearing a date not
more than eleven (11) months prior to said meeting, which instrument shall be
filed with the secretary of the meeting before being voted. Each shareholder
shall have one vote or fraction thereof for each share or fraction thereof held.
8. The board of directors may fix a record date not more than ninety (90)
nor less than ten (10) days prior to the date for which a meeting is called, as
of which the shareholders entitled to vote at such meeting, or any adjournment
thereof, shall be determined, notwithstanding any transfer or the issue of any
share occurring after such record date.
ARTICLE II
DIRECTORS
1. The number of directors which shall constitute the whole board shall
be not less than three (3) nor more than fifteen (15). Within these
limits, the shareholders or a majority of the entire board of directors may
increase or decrease the number of directors, but the tenure of office of any
director shall not be affected by any decrease in the number of directors then
in office. Subject to death, resignation or removal, each director shall hold
office until the next meeting of shareholders called for the purpose of
conducting the election of such director or a successor thereto, and until his
successor is elected and qualified. Directors need not be shareholders of the
corporation.
2. If the office of any director or directors becomes vacant for any
reason, a majority of the remaining directors, though less than a quorum, may
choose a successor or successors, provided that immediately after filling any
such vacancy, at least two-thirds (2/3) of the directors then holding office
shall have been elected to such office by the shareholders of the corporation
entitled to vote at any meeting of shareholders; otherwise such vacancy
shall be filled by vote of the shareholders at a meeting called for such
purpose.
3. The property and business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute, the articles of
incorporation or these by-laws prohibited or directed or required to be
exercised or done by the shareholders.
4. The board of directors may hold its meetings and keep the books of the
corporation at the office of the corporation in the City of West Des Moines,
State of Iowa, or at such other places as they may from time to time determine.
<PAGE>
The original or duplicate stock ledger shall be kept at the office of the
corporation in the City of West Des Moines, State of Iowa, or at the office of
any transfer agent which may be employed by the corporation pursuant to Article
X of the articles of incorporation.
5. A regular meeting of the board may be held at the place of and
immediately following the meeting of the shareholders at which such board was
elected, either within or without the State of Maryland; provided the directors
may, by unanimous consent of the whole board in writing, hold their regular
meeting at such other place and time as they may determine. No notice of such
meeting shall be necessary to the newly elected directors in order to legally
constitute the meeting provided a quorum shall be present. Other regular
meetings of the board of directors shall be held without notice at such time and
place, either within or without the State of Maryland, as shall from time to
time be determined by the board.
6. Special meetings of the board of directors may be held at any time
when called by the president or two (2) or more directors. Not less than
twenty-four (24) hours notice of any special meeting shall be given by the
secretary or the officer calling such meeting to each director either in
person, by telephone, by mail or by telegram. Such notice may be waived by any
director either in person, or in writing, or by telegram. Such special
meetings shall be held at such time and place, within or without the State of
Maryland, as the notice thereof or waiver shall specify. Unless otherwise
specified in the notice thereof, any and all business may be transacted at any
meeting of the board of directors.
7. At all meetings of the board of directors one-third (1/3) of the
entire board of directors shall be necessary and sufficient to constitute a
quorum for the transaction of business and the act of the majority of the
directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by
statute, by the articles of incorporation or by these by-laws. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
ARTICLE III
COMMITTEES
The board of directors may, by resolution or resolutions passed by a
majority of the whole board, elect from their own number an executive committee
to consist of not less than three (3) nor more than five (5) members, which
shall have the power to conduct the current and ordinary business of the
corporation while the board of directors is not in session. The board of
directors may also in the same manner elect from their own number from time to
time other committees, the number composing such committees and the powers
conferred thereon to be determined from the resolution creating the same. The
committees shall keep regular minutes of their proceedings and report the same
to the board of directors when required.
<PAGE>
ARTICLE IV
NOTICES
1. Whenever, under the provisions of any statute, the articles of
incorporation or these by-laws, notice is required to be given to any
shareholder or director, it shall not be construed to mean personal notice
unless the context otherwise provides. Such notice may be given in writing, by
mail, by depositing the same in a post office or letter box, in a post-paid
sealed wrapper, addressed to such shareholder or director at such address as
appears on the books of the corporation, and such notice shall be deemed to be
given at the time when the same shall be thus mailed.
2. Whenever any notice is required to be given under the provisions of
any statute, the articles of incorporation or by these by-laws, a waiver thereof
in writing signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
1. The officers of the corporation shall be elected annually by the board
of directors. The board of directors may elect one of its own members as
chairman of the board, and shall elect a president, secretary and treasurer.
The board of directors may also elect one or more vice-presidents, one or more
assistant secretaries and one or more assistant treasurers. Two or more
offices, when consistent, may be held by the same person, except that any person
holding the office of president shall not hold the office of vice-president.
The president of the corporation shall be a director. All other officers may
be, but need not be, directors of the corporation.
2. The board of directors may appoint such other officers, agents and
representatives of the corporation as shall be deemed necessary, with such
powers for such term and to perform such acts and duties on behalf of the
corporation as the board of directors may see fit to the extent authorized or
permitted by law, the articles of incorporation and these by-laws.
3. The chairman of the board, if one shall be elected, shall preside at
all meetings of the shareholders and board of directors, and shall perform such
other duties as the board of directors may from time to time prescribe.
4. The president shall be the chief executive officer of the corporation
and, in the absence of the chairman of the board, or if a chairman is not
elected, shall preside at all meetings of the shareholders and board of
directors. The president shall have power to sign all certificates for shares
of stock. The president shall perform such other duties as the board of
directors shall from time to time prescribe.
5. The vice-presidents, in the order of their seniority or as designated
by the board of directors, shall in the
<PAGE>
absence or disability of the president, perform the duties and exercise the
powers of the president, and shall perform such other duties as the board of
directors may from time to time prescribe.
6. The secretary shall record all votes and proceedings of meetings of
the shareholders and of the board of directors in the corporation records. He
shall give, or cause to be given, notice of all meetings of the shareholders and
meetings of the board of directors when notice thereof is required. The
secretary shall have custody of the seal of the corporation and may affix the
same to any instrument requiring the corporate seal and attest to the same with
his signature. He shall have power to sign all certificates for shares of stock
and shall perform such other duties as the board of directors may from time to
time prescribe.
7. The assistant secretaries in order of their seniority or as directed
by the board of directors, shall in the absence or disability of the
secretary, preform the duties and exercise the powers of the secretary and shall
perform such other duties as the board of directors may prescribe.
8. The treasurer shall deliver all funds and securities of the
corporation which may come into his hands to such bank or trust company as the
board of directors may designate as custodian in accordance with Article X of
the articles of incorporation. He shall keep such record of the financial
transactions of the corporation as the board of directors shall prescribe. The
treasurer shall have power to sign all certificates for shares of stock and
shall perform such other duties as the board of directors may from time to time
prescribe.
9. The assistant treasurers in order of their seniority or as directed by
the board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties as the board of directors may prescribe.
10. The officers of the corporation shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors. If the
office of any officer shall become vacant for any reason, the vacancy shall be
filled by the board of directors.
ARTICLE VI
STOCK CERTIFICATES
1. The certificates of stock of the corporation shall be in the form
prescribed by the board of directors and shall be signed by the president, or a
vice-president and the secretary or treasurer or an assistant secretary or an
assistant treasurer. If the board of directors shall require all certificates
for shares of stock to be signed (1) by a transfer agent or an assistant
transfer agent, or (2) by a transfer clerk, acting on behalf of the
corporation, the signature of any officer of the
<PAGE>
corporation thereon and the seal of the corporation thereon may be facsimiles.
2. In the event any officer of the corporation authorized to sign
certificates for shares of stock of the corporation shall die or cease to hold
office, the board of directors may, by resolution, adopt and permit to be
issued, when duly countersigned, certificates bearing the signature, either real
or facsimile, of such officers.
3. The board of directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, mutilated or destroyed upon such terms
and upon such conditions as it may prescribe.
4. The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of the
State of Maryland.
5. Shares of stock shall be transferable, so as to affect the rights of
the corporation, only by transfer recorded on the books of the corporation in
person or by attorney, and upon surrender of the certificates.
6. The board of directors shall have power to fix in advance a date, not
exceeding sixty (60) days preceding the date for the payment of any dividend, or
the date for the allotment of rights, as a record date for the determination of
the shareholders entitled to receive payment of any dividend or to any such
allotment of rights. In such case only such shareholders of record on the date
so fixed shall be considered shareholders for the purpose stated,
notwithstanding any transfer of any shares on the books of the corporation after
any such record date fixed as aforesaid.
ARTICLE VII
INVESTMENT AND OTHER RESTRICTIONS
The investment restrictions of the corporation's Portfolios shall be as set
forth in the corporation's registration statement as filed with the Securities
and Exchange Commission and in effect from time to time, and may be changed only
pursuant to the appropriate vote of shareholders and/or directors as set forth
in such registration statement and in accordance with applicable law.
<PAGE>
ARTICLE VIII
CUSTODIAN
1. The custodian employed by the corporation pursuant to Article X of
the articles of incorporation shall be required to enter into a contract with
the corporation which shall contain in substance the following provisions:
(a) The corporation will cause all securities and funds owned by the
corporation to be delivered or paid to the custodian, except as may be
permitted by the Investment Company Act of 1940.
(b) The custodian will receive and receipt for any monies due to the
corporation and deposit the same in its own banking department or in such
other banking institution, if any, as the board of directors may direct.
The custodian shall have the sole power to draw upon any such
account.
(c) The custodian shall release and deliver securities owned by the
corporation in the following cases only:
(1) Upon the sale of such securities for the account of the
corporation and the receipt of payment therefore;
(2) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable, provided that
in any such case the cash proceeds thereof shall be delivered to the
custodian;
(3) To the issuer thereof or its agent for transfer into the
name of the corporation or the custodian, or a nominee of either, or
for exchange for a different number of bonds or certificates
representing the same number of shares or aggregate face amount,
provided that in any such case the new securities replacing such
securities are delivered to the custodian;
(4) To the broker selling the same for examination in accord
with the "street delivery" custom;
(5) For exchange or conversion pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, provided that in any such
case the new securities and cash, if any, are delivered to the
custodian;
(6) In the case of warrants, rights or similar options the
surrender thereof shall be only for the exercise of such warrants,
rights or other options on behalf of the corporation upon interim
receipts or temporary securities for definitive securities;
(7) For the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(8) For the purpose of effecting a loan of the corporation's
securities to any person, firm, corporation or trust upon the receipt
by the custodian of cash or cash equivalent collateral at least equal
to the market value of the securities loaned;
<PAGE>
(9) To any bank for the purpose of collateralizing the
obligation of the corporation to repay any monies borrowed by the
corporation from such bank; provided, however, that custodian may at
the option of such lending bank keep such collateral in its posession,
subject to the rights of such bank given it by virtue of any
promissory note or agreement executed and delivered by the corporation
to such bank; or
(10) For the purpose of redeeming in kind shares of the
corporation upon delivery thereof to the custodian.
(d) The custodian shall pay out monies of the corporation only upon:
(1) the purchase of securities for the account of the
corporation and the delivery in due course of such securities to the
custodian;
(2) or in connection with the conversion, exchange or surrender
of securities owned by the corporation as set forth herein;
(3) for the repurchase or redemption of shares issued by the
corporation;
(4) for the making of any disbursements authorized by the board
of directors pursuant to the articles of incorporation and these by-
laws;
(5) in connection with the payment to a bank of the interest on,
or any portion of the principal of, any loan made by such bank to the
corporation;
(6) in connection with the payment to any person who has
borrowed the corporation's securities of the amount deposited with the
custodian as collateral for such borrowing, upon delivery of such
securities to the custodian;
(7) or the payment of any expenses or liabilities incurred by
the corporation.
(e) The custodian shall make deliveries of securities and payments of
cash only upon written instructions signed by such officer or officers, or
other agent or agents of the corporation, including the investment adviser,
as may be authorized to sign such instructions by resolution of the board
of directors.
The board of directors may from time to time authorize different
persons to sign instructions for different purposes.
2. The contract between the corporation and the custodian may contain any
other provisions not inconsistent with the articles of incorporation or with
these by-laws as the board of directors may approve.
3. Such contract shall be terminable by either party upon written notice
to the other; provided, however, that upon termination of the contract or
inability of the custodian to continue to serve, the custodian shall, upon
written notice of the appointment of another bank or trust company as successor
custodian, deliver and pay over to such successor custodian all securities and
monies held by it for the account of the corporation. In such case the board of
directors shall promptly appoint a successor custodian, but in the event no
successor custodian can be found having the required qualifications and willing
to serve, it shall be the duty of the board of directors to call as promptly as
possible a special meeting of the
<PAGE>
shareholders to determine whether the corporation shall function without a
custodian or shall be liquidated. If so directed by vote of the holders of a
majority of the outstanding shares of the corporation, as shown by proper
certified resolution, the custodian shall deliver and pay over all property of
the corporation held by it as specified in such vote.
ARTICLE IX
INVESTMENT ADVISER
The board of directors, with the approval of the shareholders and
consistent with Article XI of the articles of incorporation, may enter into a
contract with any person, firm or corporation to act as investment adviser for
the corporation and to perform such duties and render such other services as
shall be deemed necessary. Any such contract shall provide that it may be
terminated at any time by the corporation without penalty and upon not more than
sixty (60) days' written notice and shall be automatically terminated in the
event of its assignment by such person, firm or corporation. Any such
contract, which shall continue in effect for a period of more than two (2)
years from the date of its execution, shall be specifically approved at least
annually by vote of a majority of the outstanding voting securities of the
corporation or by the board of directors of the corporation, including
approval by a majority of the directors who are not parties to such a contract
or affiliated persons of such party (except solely by reason of being a director
of the corporation). Such contract may contain any other provision not
inconsistent with the articles of incorporation and these by-laws.
ARTICLE X
UNDERWRITER
The board of directors, consistent with Article XI of the articles of
incorporation, may enter into a contract with any person, firm or corporation
to act as underwriter for the corporation and to perform such other duties and
render such other services as shall be deemed necessary. Any such contract
shall provide that it shall be automatically terminated in the event of its
assignment by such person, firm or corporation, and that in the event it shall
continue in effect for a period of more than two (2) years from the date of
execution, it shall be specifically approved at least annually by vote of a
majority of the outstanding voting securities of the corporation or by the board
of directors of the corporation, including approval by a majority of the
directors who are not parties to such contract or affiliated persons of any such
party (except solely by reason of being a director of the corporation). Such
contract may be exclusive or not exclusive and may be, but need not be, with the
same person, firm or corporation, a party to an investment adviser's contract
with the corporation as provided in the articles of incorporation and these by-
laws. Such contract may also contain any provision not inconsistent with the
articles of incorporation and these by-laws.
<PAGE>
ARTICLE XI
STOCK TRANSACTIONS BY OFFICERS AND OTHERS
No officer or director of the corporation, and insofar as the corporation
can enforce this prohibition, neither the investment adviser nor an underwriter,
as described in Article IX and Article X, respectively, nor any member, officer,
director, trustee or shareholder of such investment adviser or underwriter shall
take a long or short position in the securities issued by the corporation,
except as follows:
(a) The foregoing provision shall not prohibit an underwriter from
purchasing shares of the corporation from the corporation or from another
underwriter if such purchases are limited to purchases for the purpose of
filling orders for such shares received by such underwriter, and provided
that orders to purchase from the corporation or from another underwriter
are entered with the corporation or the custodian promptly upon receipt by
the purchasing underwriter or, in case of a purchase from another
underwriter, upon receipt by such other underwriter of orders for such
shares, unless the purchasing underwriter is otherwise instructed by a
retail customer;
(b) The foregoing provision shall not prohibit an underwriter
from purchasing shares of the corporation as agent for the account of the
corporation.
(c) The foregoing provision shall not prohibit the purchase of shares
of the corporation from the corporation or from an underwriter by an
officer or director of the corporation or by such underwriter, or by any
member, officer, director, trustee or shareholder of the investment adviser
or of such underwriter at the public offering price at the time of such
purchase.
(d) The foregoing provision shall not prohibit the purchase of shares
of the corporation at net asset value, pursuant to a uniform offer
described in the prospectus, by any officer or director of the corporation,
its investment adviser or principal underwriter or by any full time
employee or sales representative of any of the foregoing who has acted as
such for not less than ninety (90) days, or by any trust, pension, profit-
sharing or other benefit plan for such persons; provided, that such
purchases are made upon the written assurance of the purchaser that the
purchase is made for investment purposes and that the shares will not be
re-sold except through redemption or repurchase by or on behalf of the
corporation.
<PAGE>
ARTICLE XII
AUDITOR
An auditor shall be selected annually, pursuant to the Investment Company
Act of 1940.
ARTICLE XIII
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
ARTICLE XIV
SEAL
The corporate seal of the corporation shall, subject to alteration by the
board of directors, consist of a flat-faced circular die, upon which shall be
engraved or cut the word "Maryland", together with the name of the corporation
and the year of its incorporation.
ARTICLE XV
INDEMNIFICATION
1. The Corporation shall indemnify each present and past officer and
director and his heirs and personal representative to the full extent permitted
by the Corporation's Articles of Incorporation and the Annotated Code of
Maryland Corporations and Associations Sec. 2-418 or any successor statute as
amended from time to time.
2. With respect to a proceeding against an officer or director brought by
or on behalf of the Corporation to obtain a judgment or decree in its favor,
the corporation shall provide the officer or director with the same
indemnification, after the same determination, as it is required to provide with
respect to a proceeding not brought by or on behalf of the Corporation.
3. The board of directors in its sole discretion may authorize or provide
to an employee or agent any indemnification described in this article.
4. Any indemnification provided by this Article:
(a) Continues as to an officer, director, employee or agent who has
ceased to be such and inures to the
<PAGE>
benefit of his heirs and personal representative; and
(b) Does not exclude any other rights to which a person is or may be
entitled by law, any agreement, vote of stockholders or disinterested
directors, or otherwise as to any action, including:
(i) Action in his official capacity; and
(ii) Action in another capacity while holding the office.
5. The indemnification provided by this Article shall be provided as to
officers and directors, and may be provided as to employees and agents, with
respect to any action, suit or proceeding arising from an act or omission or
alleged act or omission, whether occurring before or after the adoption of this
Article.
6. The provisions of this Article constitute a contract between the
Corporation and each director or officer who serves in any such capacity at
any time while this Article and the relevant provisions of The Annotated Code
of Maryland Corporations and Associations or other applicable law, if any, are
in effect, and repeal or modification of any such law or of this Article shall
not affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought or threatened based in whole or in part upon any such
state of facts.
7. Each section or portion thereof of this Article shall be deemed
severable from the remainder, and the invalidity of any such section or portion
shall not affect the validity of the remainder of this Article.
8. Nothing in this Article protects, or purports to protect, or may be
interpreted or construed to protect, any officer or director against any
liability to the Corporation or its security holders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE XVI
AMENDMENTS
Either the board of directors or the shareholders may make, amend, alter or
repeal the by-laws at any meeting duly held, the notice of which includes notice
of the proposed addition, amendment, alteration or repeal of such by-laws;
provided, however, that the provisions concerning investment and other
restrictions contained in Article VII of these by-laws shall not be amended,
altered or repealed unless authorized by the vote of a majority of the
outstanding voting securities of the corporation.
<PAGE>
These by-laws include all amendments adopted through November 11, 1987 as
follows:
Article I, Section 8, amended June, 1973.
Article II, Section 4, amended September, 1974.
Article VI, Section 6, amended January, 1977.
Article XV, amended April, 1978.
Article I, Section 2, amended April, 1979.
Article I, Section 7, amended April, 1980.
Article VII, Section 8, amended November, 1980.
Article I, Sections 1, 2, 3, 5 and 9; Article II, Sections 2 and 5;
Article V, Section 1; amended August, 1987.
Article I, Section 3; Article VII; Article VIII; amended November 11,
1987.
<PAGE>
Account
----------------------------------------------------- Certificate
Discount/Account No. Number
----------------------------------------
Number of Shares
--------------------------------------------
Date
--------------------------------------------------------
COMMON STOCK
PAR VALUE $0.001
NUMBER [LOGO] SHARES
FBL MONEY MARKET FUND, INC.
INCORPORATED UNDER THE LAWS OF MARYLAND
SEE REVERSE
FOR CERTAIN DEFINITIONS
THIS CERTIFIES OWNERSHIP BY S P E C I M E N
CUSIP
of the indicated number of fully paid and non-assessable shares of par value
of one tenth of one cent (0.001) each, of the common stock of FBL MONEY
MARKET FUND, INC., transferable on the books of the corporation by the
holders hereof in person or by duly authorized attorney upon surrender of
this certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to the provisions of
the Articles of Incorporation and the By-Laws of the corporation and of all
amendments from time to time made thereto, copies of which are on file with
the Transfer Agent.
This certificate is not valid unless countersigned by the Transfer Agent.
WITNESS the facsimile seal of the corporation and the facsimile signatures of
its duly authorized officers.
Dated: _______________________________
COUNTERSIGNED:
FBL MANAGEMENT SERVICES, INC. /s/ Dean Kleckner
(WEST DES MOINES, IOWA) PRESIDENT
TRANSFER AGENT
[SEAL]
By /s/ Deb W Nelcon
- -------------------------------------- SECRETARY
AUTHORIZED SIGNATURE
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full accord
to applicable laws or regulations.
TEN COM--as tenants in common UNIF GIFT MIN ACT--______Custodian_____
(Cust) (Minor)
JT TEN --as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _________
in common (State)
Additional abbreviations may also be used though not in the above list.
REDEMPTION RIGHTS
The redemption provisions pertaining to the common stock of the corporation, as
set forth in Article VIII of the articles of incorporation of the corporation,
are as follows:
ARTICLE VIII
____________
(a) Any shareholder of record in the corporation desiring to dispose of
his shares may deposit his certificate or certificates for such shares with
the corporation or its agent, duly endorsed or accompanied by a proper
instrument of transfer, with a request that the corporation redeem the shares
represented thereby. Upon any such deposit being made, the corporation shall
be required to redeem said shares but only at the net asset value of such
shares next determined following their deposit. Payment for such shares
shall be made by the corporation within seven days after the date upon which
the shares are deposited. Whenever the board of directors, by declaration of
resolution, has suspended the determination of net asset value pursuant to the
provisions of these articles of incorporation, the right of any shareholder to
require the corporation to redeem his shares shall be likewise suspended. At
any time such suspension is in effect any shareholder may withdraw his
certificate or certificates from deposit or may leave the same on deposit, in
which case the redemption price shall be the net asset value next determined
after the suspension is terminated.
(b) The corporation may by agreement with any shareholder purchase shares
of the corporation at a price not exceeding the net asset value in effect at the
time when such purchase or contract to purchase is made or the net asset value
next to be determined.
(c) Any shares of its stock purchased or redeemed by the corporation
pursuant to the provisions of this article shall by deemed retired and shall
thereafter have the status of authorized but unissued stock.
REDEMPTION OR ASSIGNMENT FORM
THE UNDERSIGNED TENDERS THIS CERTIFICATE TO THE CORPORATION
*A. For the redemption in accordance with the corporation's charter, of _______
shares of the corporation's capital stock represented by this certificate
*B. And, for value received hereby sells, assigns, and transfers unto
_______________________________ Insert social security or other identifying
(Full Name(s) of Assignee(s)) number of person to whom the certificate is
being assigned.
_______________________________
(Address) ________________________
_______________________________
(City) (State) (Zip)
__________________ shares of the stock represented by this certificate and
hereby irrevocably constitutes and appoints ________________attorney to transfer
the same on the books of the corporation, with full power of substitution in the
premises.
SIGNATURE(S)
*If redemption, fill in paragraph _____________________________________________
A and cross out paragraph B.
If assignment, fill in paragraph _____________________________________________
B and cross out paragraph A.
If some shares are to be redeemed _____________________________________________
and others assigned, fill in both (Street)
paragraphs. _____________________________________________
(City) (State) (Zip)
CHECK ONE IF APPLICABLE
/ / A new certificate is to be NOTICE The signature(s) to this form must
issued to the undersigned correspond with the name(s) as written
for any balance of shares upon the face of the certificate in every
represented by the particular, without alteration or enlarge-
certificate and not being ment, or any change whatever.
tendered for redemption
or assignment.
/ / Place the balance of Signature(s) Guaranteed By
shares in uncertificated _______________________________________
status on my account. (Bank or Firm)
By ____________________________________
Signature(s) must be guaranteed by a
commercial bank, trust company, or member
firm of a major stock exchange (New York,
American, Midwest or Pacific Coast)
<PAGE>
INVESTMENT ADVISORY AND
MANAGEMENT SERVICES AGREEMENT
This agreement made this 23rd day of February, 1980, by and between FBL
MONEY MARKET FUND, INC., a Maryland corporation (hereinafter called the "Fund"),
and PFS MANAGEMENT SERVICES, INC., a Delaware corporation (hereinafter called
"PFS");
WITNESSETH:
In consideration of the mutual covenants herein contained, it is agreed as
follows:
1. ADVISORY SERVICES. PFS shall furnish investment research and
advice to the Fund and shall manage the investment and reinvestment of the
assets of the Fund and the conduct of its investment business, and matters
incidental thereto, all subject to the supervision of the Board of Directors of
the Fund, and the provisions of the Articles of Incorporation and By-Laws of the
Fund. PFS shall for all intents and purposes herein provided be deemed an
independent contractor and nothing in this agreement shall be construed to
constitute PFS an agent of the Fund unless expressly provided herein. The Fund
shall be free to retain at its expense other persons to furnish it with any
services whatsoever, including, without limitation, statistical, factual or
technical information or advice. The services of PFS herein provided are not to
be deemed exclusive and PFS shall be free to render similar services or other
services to others as long as its services hereunder shall not be impaired
thereby.
2. EXPENSES. PFS shall at its expense furnish the Fund with office
space (in the offices of PFS, or other such place or places as may be agreed
upon by the parties) and such office facilities, simple business equipment,
advisory, research and statistical facilities and clerical services and
personnel as may be necessary to administer the investment business of the Fund.
PFS shall arrange, if desired by the Fund, for officers or employees of PFS to
serve without salary from the Fund as directors, officers or agents of the Fund
if duly elected or appointed to such positions by the shareholders of the Fund
or by the Board of Directors thereof and subject to their individual consent and
to any limitations imposed by law. PFS will not be required to pay any other
expenses of the Fund other than those expressly enumerated herein; and in
particular, but without limiting the generality of the foregoing, PFS will not
be required to pay any of the following Fund expenses: (1) expenses for services
rendered by a custodian including those for the safekeeping of the Fund's
securities or other property and for keeping its books of account, (2) charges
and expenses of independent auditors, of legal counsel, of any transfer or
dividend disbursing agent, or any registrar of the Fund, (3) costs of acquiring
and disposing of portfolio securities, (4) interest, if any, on the obligations
incurred by the Fund, (5) the cost of calculating the net asset value of the
Fund as provided in the Articles of Incorporation and By-Laws of the Fund, of
stock certificates and of corporate reports, (6) membership dues in the
Investment Company Institute or any similar organization, (7) the cost of
reports, notices to shareholders and other shareholder communications and other
like miscellaneous expenses, (8) expenses of any registration and qualification
of shares of the Fund for sale under Federal Securities laws and the securities
laws of any state or other jurisdiction, (9) telephone and personnel costs
incurred by PFS and allocable to the above, (10) taxes and fees payable to
Federal, State or other Governmental agencies on account of the registration of
securities issued by the Fund or otherwise, and (11) expenses
<PAGE>
of underwriting and selling shares of stock issued by the Fund. The Fund shall
not pay or incur any obligation for any management or administrative expenses
for which the Fund intends to seek reimbursement from PFS as herein provided
without first obtaining the written approval of PFS.
3. COMPENSATION. For the services to be rendered and the charges and
expenses assumed and to be paid by PFS as provided herein, the Fund shall pay to
PFS compensation on a graduated basis at the annual rate of .5% (1/2 of 1%) of
the first $200,000,000 of average net assets of the Fund plus .4% (4/10 of 1%)
of the next $200,000,000 of average net assets of the Fund plus .35% (35/100 of
1%) of the next 200,000,000 of average net assets of the Fund plus .3% (3/10 of
1%) of the average net assets over $600,000,000, calculated as hereinafter set
forth, from and after the date of commencement of the initial public offering of
shares of the Fund. Compensation under this agreement shall be calculated and
accrued for each business day by applying the appropriate annual rates to the
net assets of the Fund in accordance with the formula set forth above as of the
close of the last business day preceding the day for which the fee is being
calculated, and dividing the sum so computed by the number of business days in
the fiscal year. The fees thus accrued shall be payable monthly provided that
such compensation shall be paid proportionately for any other period ending with
the termination of this agreement.
4. LIMITATION OF EXPENSES. In the event that expenses of the Fund
chargeable to its income account (including amounts payable hereunder but
exclusive of brokerage fees, interest, taxes and extraordinary expenses) for any
fiscal year ending on a date at which this agreement is in effect shall exceed
the most restrictive limitation on total expenses imposed by any State where the
Fund's shares are registered for sale, PFS will reduce its management fee or
increase its reimbursement accordingly. PFS shall pay to the Fund the amount by
which such expenses exceed the applicable limitation, within three days after
the determination of the amount thereof. In no event shall PFS be required to
reimburse the Fund in an amount exceeding its compensation for such period under
this Agreement.
5. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases
or sales of portfolio securities for the account of the Fund, neither PFS nor
any officer, director or shareholder of PFS shall act as principal or receive
any commission other than its compensation provided for in this agreement. Such
limitation, however, shall not prohibit the payment of the usual and customary
brokerage commissions to any of such parties in the proper case. PFS agrees
that in all matters relating to the management of the investment of the assets
of the Fund it will act in conformity with the Articles of Incorporation and By-
Laws of the Fund and any resolutions, rules or regulations adopted by the Board
of Directors of the Fund. It is understood and agreed that PFS, by virtue of a
separate agreement with the Fund, may also act as underwriter for the Fund.
6. LIMITATION OF LIABILITY OF PFS. PFS shall not be liable for any
error of judgment or import of law, or for any loss suffered by the Fund in
connection with the matters to which this agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
PFS in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this agreement. It is
understood that the officers, directors, agents and shareholders of the Fund are
or may be interested in PFS as officers, directors, agents, shareholders or
otherwise, and that the officers, directors, shareholders and agents of PFS may
be interested in the Fund otherwise than as a shareholder. Any person, even
though also employed by PFS, who may be or become an employee of and paid by the
Fund shall be
<PAGE>
deemed, when acting within the scope of his employment by the Fund, to be acting
in such employment solely for the Fund and not as an employee or agent of PFS.
7. EFFECTIVE DATE AND TERM. This agreement shall become effective
on the date hereof and shall continue until the close of business on November
15, 1981 and from year to year thereafter, but only so long as such continuance
is approved at least annually in a manner consistent with the Investment Company
Act of 1940. It may be terminated at any time without payment of any penalty by
vote of the Board of Directors of the Fund or by vote of the holders of a
majority of the outstanding shares of the Fund as defined under the Investment
Company Act of 1940 or by PFS on sixty (60) days' written notice to the other
party. This agreement may also be terminated at any time without payment of any
penalty by vote of the Board of Directors of the Fund in the event that it shall
have been established by a court of competent jurisdiction that PFS or any
officer or director of PFS has taken any action which results in a breach of the
covenants of PFS set forth herein. This agreement shall automatically terminate
in the event of its assignment within the meaning of such term under the
Investment Company Act.
8. NOTICES. Any notice under this agreement shall be in writing
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
9. AMENDMENT OF THIS AGREEMENT. No provision of this agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this agreement shall be
effective until approved by vote of the holders of a majority of the Fund's
outstanding shares as defined in the Investment Company Act of 1940.
10. MISCELLANEOUS. The captions in this agreement are included for
convenience or reference only and in no way decline or limit any of the
provisions hereof or otherwise effect their construction or effect. This
agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Fund and PFS have caused this agreement to be
executed in their names and on their behalf and under their corporate seals by
and through their duly authorized officers all on the day and year first above
written.
FBL MONEY MARKET FUND, INC.
By:
-------------------------------
Its Vice President
ATTEST:
- -------------------------------------------
Its Assistant Secretary
<PAGE>
PFS MANAGEMENT SERVICES, INC.
By:
-------------------------------
Its President
ATTEST:
- -------------------------------------------
Its Assistant Secretary
<PAGE>
UNDERWRITING AGREEMENT
This agreement made this 23rd day of February, 1980, between FBL MONEY
MARKET FUND, INC., a Maryland corporation (herein after called the "Fund"), and
PFS MANAGEMENT SERVICES, INC., a Delaware corporation (hereinafter called the
"Underwriter");
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
agreed as follows:
1. The Fund hereby appoints the Underwriter its exclusive agent for
the distribution of common stock of the Fund in jurisdictions wherein shares of
the Fund may legally be offered for sale; provided, however, that the Fund in
its absolute discretion may (1) issue shares of its common stock in connection
with the acquisition of assets or shares or securities of another corporation or
entity or in connection with a merger or consolidation with any other
corporation as and to the extent permitted by its Articles of Incorporation and
any applicable laws; (2) issue or sell shares directly to the shareholders of
the Fund upon such terms and conditions and for such consideration, if any, as
it may determine, whether in connection with the distribution of subscription or
purchase rights, the payment or reinvestment of dividends or distributions, or
otherwise; or (3) issue or sell shares at net asset value to the shareholders of
any other investment company, for which the Underwriter shall act as exclusive
distributor, who wish to exchange all or a portion of their investment in shares
of such other investment company for shares of the Fund.
2. The Underwriter hereby accepts appointment as exclusive agent for
the distribution of the common stock of the Fund and agrees that it will use its
best efforts with reasonable promptness to sell such part of the authorized
shares of the common stock of the Fund remaining unissued as from time to time
shall be effectively registered under the Securities Act of 1933 ("Securities
Act"), at prices determined as hereinafter provided and on terms hereinafter set
forth, all subject to applicable Federal and state laws and regulations and to
the Articles of Incorporation and By-Laws of the Fund and in accordance with the
current prospectus of the Fund.
3. The Fund agrees that it will use its best efforts to keep
effectively registered under the Securities Act for sale as herein contemplated
such shares of its common stock as the Underwriter shall reasonably request and
as the Securities and Exchange Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may
terminate, suspend or withdraw the offering of shares of its common stock
whenever, in its sole discretion, it deems such action to be desirable.
5. The Underwriter shall sell shares of common stock of the Fund to
or through qualified dealers or others in such manner, not inconsistent with the
provisions hereof and the then effective Registration Statement of the Fund
under the Securities Act (and related prospectus), as the Underwriter may
determine from time to time, provided that no dealer or other person shall be
appointed or authorized to act as agent of the Fund without the prior written
consent of the Fund and that the
<PAGE>
form of each agreement between the Underwriter and any such dealer, or other
person shall have been approved by the Fund.
6. All shares of common stock of the Fund offered for sale or sold
at a price per share determined in accordance with the then current prospectus
relating to the sale of such shares except as departure from such prices shall
be permitted by the rules and regulations of the Securities and Exchange
Commission; provided, however, that any public offering price for shares of the
Fund shall be the net asset value per share plus a distribution charge of not
more than 8 1/2% of the public offering price. The net asset value per share
shall be computed in accordance with the Articles of Incorporation of the Fund
and shall be determined in the manner and at the times set forth in the then
current prospectus of the Fund related to such shares.
7. The price the Fund shall receive for all shares purchased from
the Fund shall be the net asset value used in determining the public offering
price applicable to the sale of such shares. The excess, if any, of the sales
price over the net asset value of the shares of the common stock of the Fund
sold by the Underwriter as agent shall be retained by the Underwriter as a
commission for its services hereunder. Out of such commission the Underwriter
may allow commissions or concessions to dealers and may allow them to others in
its discretion in such amounts as the Underwriter shall determine from time to
time. Except as may be otherwise determined by the Underwriter and the Fund
from time to time, such commissions or concessions shall be uniform to all
dealers.
8. The Underwriter shall issue and deliver on behalf of the Fund
such confirmations of sales made by it as agent pursuant to this agreement as
may be required. At or prior to the time of delivery by the Fund to or on the
order of the Underwriter of certificates for any shares of common stock of the
Fund, the Underwriter will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
the Underwriter may specify.
9. The Fund will execute any and all documents and furnish any and
all information which may be reasonably necessary in connection with the
qualification of its shares of common stock for sale (including the
qualification of the Fund as a dealer where necessary or advisable) in such
states as the Underwriter may reasonably request (it being understood that the
Fund shall not be required without its consent to qualify to do business in any
jurisdiction or to comply with any requirement which in its opinion is unduly
burdensome). The Underwriter, at its own expense will effect all qualifications
as dealer or broker or otherwise under all applicable state or Federal laws
required in order that the shares may be sold in as broad a territory as
practicable.
10. The Fund will furnish to the Underwriter from time to time such
information with respect to the Fund and its shares as the Underwriter may
reasonably request for use in connection with the sale of shares of the Fund.
The Underwriter agrees that it will not use or distribute or authorize the use,
distribution or dissemination by its dealers or others in connection with the
sale of such shares any statements, other than those contained in the Fund's
current prospectus, except such supplemental literature or advertising as shall
be lawful under Federal and state securities laws and regulations, and that it
will furnish the fund with copies of all such material.
<PAGE>
11. The Underwriter shall order shares of common stock of the Fund
from the Fund only to the extent that it shall have received purchase orders
therefor. The Underwriter will not make, or authorize any dealers or others to
make any short sales of shares of the Fund.
12. The Underwriter, as agent of and for the account of the Fund, may
repurchase the common stock of the Fund at such prices and upon such terms and
conditions as shall be specified in the current prospectus of the Fund.
13. In selling or reacquiring shares of common stock of the Fund for
the account of the Fund, the Underwriter will in all respects conform to the
requirements of all state and Federal laws and the Rules of Fair Practice of the
National Association of Securities Dealers relating to such sale or
reacquisition, as the case may be, and will indemnify and save harmless the Fund
from any damage or expense on account of any wrongful act by the Underwriter or
any employee, representative or agent of the Underwriter. The Underwriter will
observe and be bound by all the provisions of the Articles of Incorporation and
By-Laws of the Fund and the current prospectus of the Fund and of any
fundamental policies adopted by the Fund pursuant to the Investment Company Act
of 1940, notice of which shall have been given by the Fund to the Underwriter
which at the time in any way require, limit, restrict or prohibit or otherwise
regulate any action on the part of the Underwriter.
14. The Underwriter will require each dealer to conform to the
provisions hereof and the Registration Statement (and related prospectus) at the
time in effect under the Securities Act with respect to the public offering
price of the Fund's shares, and neither the Underwriter nor any such dealer
shall withhold the placing of purchase orders so as to make a profit thereby.
15. The Fund will pay or cause to be paid expenses of any
registration and qualification of shares of its common stock for sale under the
Federal securities laws and the securities laws of any state or other
jurisdiction in which the Underwriter may wish to arrange for the sale of the
same, the expenses of other reports and acts required by law, in connection with
such registration and qualification, and the expenses incident to the issuance
of shares of common stock, such as the cost of stock certificates, issue taxes,
and fees of the transfer agent. The Underwriter will pay all expenses (other
than expenses which one or more dealers may bear pursuant to any agreement with
the Underwriter) incident to the sale and distribution of the shares issued or
sold hereunder, including, without limiting the generality of the foregoing, all
(1) expenses of printing and distributing any prospectus and of preparing,
printing and distributing or disseminating any other literature, advertising and
selling aids in connection with the offering of the shares for sale (except that
such expenses need not include expenses incurred by the Fund in connection with
the preparation, printing and distribution of any report or other communication
to stockholders in their capacity as such), and (2) expenses of advertising in
connection with such offering. No transfer taxes, if any, which may be payable
in connection with the issue or delivery of shares sold as herein contemplated
or of the certificates for such shares shall be borne by the Fund, and the
Underwriter will indemnify and hold harmless the Fund against liability for all
such transfer taxes.
16. This agreement shall become effective on the date hereof and
shall continue until the close of business on
<PAGE>
November 15, 1981 and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually in a manner consistent
with the Investment Company Act of 1940. Either party hereto may terminate this
agreement on any date by giving the other party at least six months' prior
written notice of such termination specifying the date fixed therefor. Without
prejudice to any other remedies of the Fund in any such event the Fund may
terminate this agreement at any time immediately upon any failure of fulfillment
of any of the obligations of the Underwriter hereunder.
17. This agreement shall automatically teminate in the event of its
assignment within the meaning of such term under the Investment Company Act of
1940.
18. Any notice under this agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
agreement to be executed on its behalf by an officer thereunto duly authorized
and its corporate seal to be affixed on the day and year first above written.
FBL MONEY MARKET FUND, INC.
By:
-------------------------------------
Its Vice President
ATTEST:
By:
-------------------------------
Its Assistant Secretary
PFS MANAGEMENT SERVICES, INC.
BY:
-------------------------------------
Its President
ATTEST:
By:
---------------------------
Its Assistant Secretary
<PAGE>
DEALER AGREEMENT
PFS MANAGEMENT SERVICES, INC.
5400 University Avenue
West Des Moines, Iowa 50265
Gentlemen:
As principal underwriter of the shares of FBL Money Market Fund, Inc. (the
"Fund"), as that term is defined in Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., we understand
that you are a member of such Association or a foreign dealer not eligible for
membership in such Association and, on the basis of such understanding, invite
you to become a member of the group of securities dealers (the "Selling Group")
authorized to solicit applications to purchase shares of the Fund
("applications") on the following terms:
1. Applications received from you and accepted by the Fund will be at the
public offering price determined in the manner described in the current
prospectus of the Fund notwithstanding anything to the contrary herein contained
in this Agreement. The public offering price for initial purchases is the net
asset value per share plus a one-time sales charge of $100. The minimum initial
purchase for any account for any person is $1,500. The sales charge shall not
be applicable to the following: To subsequent investments in the same accounts;
or to initial or subsequent investments in separate accounts for or for the
benefit of the initial purchaser, his (her) spouse, and child(ren) under the
age of 21; or to any single fiduciary account, including a pension, profit
sharing or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code. Nor is it applicable to the
initiation of payroll deduction plan accounts or to reinvestments by former
shareholders whose accounts have been closed for less than one year, but it
shall be applicable to initial investments by former shareholders whose accounts
have been closed for one year or more. With respect to each application
received from you and accepted by the Fund for which the $100 one-time service
charge is paid by the applicant, you shall receive as a commission for your
services hereunder the amount of $80.
2. The procedure relating to the handling of applications shall be
subject to instructions which we shall forward from time to time to all members
of the Selling Group. All applications are subject to acceptance by us and the
Fund at our Des Moines, Iowa office and we and the Fund reserve the right, in
our and its sole discretion, to reject any application.
3. As a member of the Selling Group, you agree not to purchase shares of
the Fund from any person and only will make arrangements to solicit applications
through us, the Fund's agent. You will solicit applications only from persons
other than a securities dealer or broker and will only enter applications for
yourself as a bona fide investment.
4. You agree that you will promptly forward all customers' applications
to us. The Fund will not accept conditional applications.
5. You agree that the price applicable to applicants will be the public
offering price next determined after
<PAGE>
receipt of the applications and payment at the Fund's office in West Des Moines,
Iowa in accordance with the current prospectus of the Fund.
6. Payments for Fund shares purchased must be made at or prior to
acceptance of the application at the Fund's office in West Des Moines, Iowa, as
contemplated by the application forms furnished by us. Delivery of shares will
be made by credit to shareholder accounts or, if requested in writing, by
delivery of certificates.
7. If any shares subscribed for under the terms of this agreement are
tendered to the Fund for redemption under the terms of its Articles of
Incorporation within seven business days after the date of the Fund's
confirmation to you of an original application therefor, you agree to pay
forthwith to us the full amount of the concession allowed to you on the original
sale and we agree to pay such amount to the Fund when received by us. We also
agree to pay to the Fund the amount of our share of the sales commission on the
original sale of such shares. We shall notify you of such repurchases or
redemption within ten days of the date on which the redemption request was
received in good order by the Fund.
8. Applications are subject to acceptance by us and the Fund. The Fund
reserves the right, in its discretion, without notice to you to suspend sales or
withdraw the offering of shares entirely and to change the sales charge to
investors. We reserve the right to change the concessions to the members of the
Selling Group or to modify, cancel or assign this agreement, which shall be
construed in accordance with the laws of the State of Iowa.
9. No person is authorized to make any representations concerning the
Fund or its shares except those contained in the effective prospectus and any
such information as may be authorized by us for use as information supplemental
to the prospectus. In soliciting applications for shares, you shall rely solely
on the representations contained in the effective prospectus and the
supplemental information above mentioned.
10. Additional copies of any prospectus and any printed information
designated as supplemental to such prospectus will be supplied by us to members
of the Selling Group in reasonable quantities upon request.
11. In no transaction shall you have any authority whatever to act as
agent of the Fund or of ours or any other member of the Selling Group, and
nothing in this agreement shall constitute either of us the agent of the other
or shall constitute you or the Fund the agent of the other. In all transactions
in shares of the Fund between us, we are acting as agent for the Fund and you
are acting as principal or as agent for an undisclosed principal, as the case
may be.
12. Your acceptance of this agreement constitutes a representation that
you are (i) a registered security dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and agree to comply with all
applicable state and federal laws and rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice or the National
Association of Securities Dealers, Inc., including specifically Section 26,
Article III thereof, or (ii) if you are offering and selling shares of the Fund
in jurisdictions outside the several states, territories and possessions of the
<PAGE>
United States and are not otherwise required to be a member of the National
Association of Securities Dealers, Inc., you nevertheless agree to conduct your
business in accordance with the spirit of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and to observe the laws and
regulations of the applicable jurisdiction. You likewise agree that you will
not offer or sell shares of the Fund in any state or other jurisdiction in which
they may not lawfully be offered for sale.
13. All communications to us shall be sent to PFS Management Services,
Inc., 5400 University Avenue, West Des Moines, Iowa, 50265. Any notice to you
shall be duly given if mailed or telegraphed to you at your address as
registered from time to time with the National Association of Securities
Dealers, Inc. or, if you are not a member of said Association, as most recently
furnished by you to us for such purpose.
PFS Management Services, Inc.
By:
------------------------------------------
The undersigned accepts your invitation to become a member of the Selling
Group and agrees to abide by the foregoing terms and conditions.
Dated:
------------------------------- PFS SALES, INC.
-----------------------------------
(Dealer--please type or print name)
By:
------------------------------------------
---------------------------------------------
Street
---------------------------------------------
City, State Zip Code
<PAGE>
CUSTODIAN ACCOUNT AGREEMENT
THIS CUSTODIAN ACCOUNT AGREEMENT, dated December 15, 1992, is entered into
by and between FARM BUREAU LIFE INSURANCE COMPANY, an insurance company
organized under the laws of Iowa, and its affiliated companies ("Company"), and
BANKERS TRUST COMPANY, a New York banking corporation ("Custodian");
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS
Whenever used in this Agreement, or in any appendices, schedules or
exhibits hereto or amendments hereof, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "ACCOUNT SECURITIES" means the Securities, other property and cash
held by Custodian in the Custodian Account, and shall include all income
generated by or the proceeds of any sale of such Securities.
(b) "AUTHORIZED PERSON" means any Person or Persons jointly or severally
authorized from time to time, in a writing in substantially the form of Exhibit
A attached hereto and made a part hereof, delivered to Custodian, to act on
behalf of Investment Adviser or Company with respect to any action required or
permitted to be taken by the Investment Adviser or Company under this Agreement.
Such writing shall clearly indicate the scope of authority of each Authorized
Person.
(c) "CUSTODIAN ACCOUNT" means the one or more custodianship, safekeeping
and cash accounts established and maintained by Custodian or any subcustodian
for Company pursuant to this Agreement, as listed in Exhibit B attached hereto
and made a part hereof.
(d) "DEPOSITORY" means any centralized securities depository system,
domestic or foreign, whether presently or hereafter organized, in which
Custodian participates, and shall include (i) the Depository Trust Company, (ii)
the Participant's Trust Company, or (iii) any other centralized securities
depository system selected by Custodian, but subject to the approval of Company
and any required approval by regulatory authorities applicable to Custodian in
the conduct of its business as Custodian.
(e) The term "HOLD" shall include Custodian's authority to deposit part or
all of the Account Securities with a Depository.
1
<PAGE>
(f) "INSTRUCTIONS" means a communication received by Custodian from one or
more Authorized Persons directing action or delivering information pursuant
thereto. Instructions may be oral or written and may be delivered (i) by
telephone, (ii) in hard copy, or (iii) by computer, electronic instruction
system or telecommunications terminals, which shall include but not be limited
to, a telex, a TWXS, a facsimile transmission, a bank wire or Custodian's
proprietary POL*ARIS Service; PROVIDED,HOWEVER, THAT the Parties hereto or
Custodian and Investment Adviser, as the case may be, shall have agreed to the
form, the means of transmission and the means of identification of such
Instructions; FURTHER PROVIDED THAT Instructions initially given orally shall be
confirmed within the thirty (30) minute period immediately following the
initial receipt of the Instructions by Custodian in a manner consistent with
clauses (ii) or (iii) above. Instructions shall conform to operating procedures
communicated from time to time by Custodian to Company.
(g) "PARAGRAPH" means a paragraph of this Agreement.
(h) "PERSON" means a natural person, trust, estate, corporation,
association, partnership, joint venture, employee organization, committee,
board, participant, beneficiary, trustee, partner, or venturer, including but
not limited to Company and Investment Advisers, as the context may require.
(i) "SECURITY" or "SECURITIES" includes bonds, debentures, notes, stocks,
evidences of indebtedness and other securities and property.
(j) "INVESTMENT ADVISER" means an entity duly appointed by Company as an
investment manager as further described in paragraph 7.
The plural of any term shall have a meaning corresponding to the singular
thereof as so defined and any neuter pronoun used herein shall include the
masculine or feminine as the context may require.
Any references in this Agreement to any provision of any statute, code or
regulation shall be deemed to incorporate any amended, substitute or successor
provisions, whenever adopted.
2. APPOINTMENT OF CUSTODIAN
(a) APPOINTMENT. Subject to the provisions hereof, Company hereby
employs, appoints and authorizes Custodian to act as custodian of all the
Securities and monies at the time owned by or in the possession of Company
during the period of this Agreement which have been delivered to, or Custodian
has otherwise expressly been given authority to hold in the Custodian Account.
(b) ESTABLISHMENT OF CUSTODIAN ACCOUNT. Custodian hereby agrees to
establish the Custodian Account in the name of Company, or such other name or
names as Company and Custodian may agree upon from time to time, and to hold in
the Custodian Account all Securities or other property and cash deposited with,
delivered to or received by Custodian for deposit in the Custodian Account in
accordance with Instructions; PROVIDED THAT Custodian shall have the right to
refuse to accept any Securities or other property that are not in proper form
for deposit, but Custodian may refuse to accept any Security or other property
only after it discloses to Company the inadequacy or
2
<PAGE>
deficiency in the Security or other property and it grants Company a
commercially reasonable time to correct such inadequacy or deficiency.
Custodian shall have no responsibility or liability for or on account of
Securities or other assets not delivered to Custodian or not accepted by
Custodian as hereinabove provided.
(c) CUSTODIAN'S PERSONNEL. The individual personnel of Custodian duly
authorized to have access to Account Securities, to receive Instructions and to
act thereon are listed in the certification annexed hereto as Exhibit C and, as
amended from time to time, made a part hereof. Custodian shall advise Company
of any change in the individuals so authorized by written notice to Company.
(d) SCOPE OF DUTIES. Custodian's duties and responsibilities shall be
limited to those expressly set forth in this Agreement, and in any appendices,
schedules or exhibits hereto.
3. FORM OF CUSTODY AND SAFEKEEPING
(a) FORM OF CUSTODY. Custodian shall be responsible for safekeeping
Account Securities. Custodian is authorized to (i) retain physical possession
of Account Securities, and/or (ii) deposit Account Securities with a Depository
or Sub-Custodian (hereinafter defined) selected by Custodian pursuant to
paragraph 8(b) and which is approved by the Company; provided, however that if
the Company shall deliver to Custodian foreign securities to be treated as
Account Securities, then Custodian is authorized to (i) retain physical
possession of such foreign securities, and/or ii) deposit such foreign
securities with a Depository or Sub-Custodian selected by Custodian pursuant to
paragraph 8(b). For purposes of this section a foreign security means a
security that is issued by an entity that is not domiciled in the United States
or a United States territory.
(b) PHYSICAL CUSTODY. Custodian shall ensure that Account Securities are
at all times properly identified as belonging solely to Company. In this
regard, Custodian shall physically segregate Account Securities from any
property owned by Custodian. Custodian shall not be required to physically
segregate Account Securities (other than bearer securities which shall be so
segregated) from other securities or property held by Custodian for third
parties, but Custodian shall maintain adequate records showing the true
ownership of Account Securities.
(c) DEPOSITORY CUSTODY. If Custodian deposits Account Securities with a
Depository, Custodian shall maintain adequate records showing the location and
true ownership of such property.
(d) REGISTRATION IN NOMINEE NAME. Custodian is authorized to reregister
securities received in registered form in the name of its nominee, or the
nominee of a Depository, unless alternate registration Instructions are
furnished. In consideration of Custodian's registration of Account Securities
in the name of its nominee, Company agrees to pay on demand to Custodian or its
nominee the amount of any loss or liability for stockholders' assessments, or
otherwise, claimed or asserted against Custodian, such nominee or Depository's
nominee by reason of such registration. Securities may also be held in the
Custodian Account in coupon bearer form, where, in the judgment of Custodian, it
is not practicable or possible to register such securities.
3
<PAGE>
4. LIABILITY FOR SAFEKEEPING
(a) LIMITATION OF LIABILITY. Custodian's safekeeping responsibility under
paragraph 3 shall be limited to exercising the care and diligence usually
accorded by Custodian to the safekeeping of its own property; PROVIDED, HOWEVER,
Custodian's responsibility under paragraph 3 is limited to losses occasioned by
the negligence, willful misconduct or bad faith of its employees or by robbery,
burglary, theft or destruction while the securities are in Custodian's physical
possession. With respect to deliveries of securities to a third party,
Custodian shall be deemed no more than an "intermediary" as defined in Section
8-306(3) of the New York Uniform Commercial Code. Custodian shall not be under
any obligation to any Person to insure Custodian or the Custodian Account
against loss. Provided that Custodian shall maintain an off-premises, back-up
information storage site for its custodial books and records which i) shall
include books and records documenting the contents of Company's Custodian
Account; ii) shall enable Custodian to continue to do business in a commercially
reasonable manner; and iii) shall enable Custodian, through the normal course of
business, to physically replace all of the Account Securities controlled by
Custodian on behalf of Company. Custodian shall not be liable under any
circumstances for loss or damage due to war, insurrection, terrorist act, civil
disobedience, hurricane, cyclone, tornado, earthquake, volcanic eruption, other
similar natural disaster, nuclear fusion or fission or radioactivity. Custodian
shall not be liable for loss or damage due to equipment failure, except such as
is due to its own negligence, willful misconduct, or bad faith.
(b) LIABILITY FOR LOSS. In the event of loss or damage to Account
Securities for which Custodian is liable under the foregoing provisions of this
paragraph 4, Custodian shall replace such Account Securities with securities of
the same class and issue, together with all rights and privileges pertaining
thereto; PROVIDED THAT, if the Account Securities so lost are subject to a
contract of sale and Custodian is unable to deliver the Account Securities or
replacements therefor for settlement on the date specified in Instructions,
Custodian shall be liable to Company for the contract price of the Account
Securities so sold plus simple interest thereon at the prime rate as reported in
the Wall Street Journal computed from the specified settlement date to the date
of payment to Company.
5. TRANSACTIONS.
(a) INSTRUCTIONS. Company may from time to time give Custodian, or
appoint an Investment Adviser to give Custodian, Instructions concerning
purchases and sales and other transactions with respect to Account Securities
and Custodian shall effect such transactions subject to the provisions and
undertakings of this paragraph 5. No person shall have access to Account
Securities or the right to order or effect transactions in Account Securities
except as set forth in this Agreement or in Instructions.
(i) AUTHORIZATION TO ACT ON INSTRUCTIONS. Custodian is authorized to
accept, act upon and rely upon Instructions that Custodian believes in
good faith to have been given by an Authorized Person, or that are
transmitted with proper testing or authentication in accordance with
procedures specified by Custodian, or that are transmitted
electronically through Custodian's POL*ARIS communications system or
any similar electronic instruction system acceptable to Custodian.
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(ii) RELIANCE ON INSTRUCTIONS. Custodian shall incur no liability to
Company or otherwise and shall be fully protected in acting in
compliance with and reliance on Instructions that Custodian reasonably
believes in good faith to be genuine and to be signed, sent or made by
an Authorized Person, including oral Instructions which are promptly
confirmed in accordance with Section 1(f) hereof. If Instructions are
required to be given before the Custodian may act and such
Instructions have not been given, Custodian shall contact Company to
inform it of the absence of required Instructions and shall allow
Company a commercially reasonable time to provide Custodian with
Instructions.
(iii) ERRORS IN INSTRUCTIONS. Custodian shall not be responsible for
any errors or inaccuracies contained in Instructions, which are
properly confirmed, except where such errors or inaccuracies are due
to its own negligence, willful misconduct or bad faith.
(b) DELIVERIES AND RECEIPTS. In accordance with Instructions, Custodian
shall deliver specified Account Securities (including cash in the Custodian
Account) to the Person designated in such Instructions and shall receive in
exchange therefor the Securities and/or cash and/or other property specified
therein. Account Securities may be delivered "free" if the Instructions so
specify and the Instructions are authorized by two, separate, Authorized
Persons. If cash is to be delivered by Custodian, the Custodian Account shall
be charged by Custodian on the actual settlement date. Receipts of cash by
Custodian shall be effected in accordance with paragraph 5(c). Custodian shall
exercise customary care and diligence in examining and verifying the
certificates or other indicia of ownership of the securities or other property
received before accepting or paying for same. If Instructions direct Custodian
to deliver certificates or other physical evidence of ownership of Account
Securities to any Person other than a Depository, Custodian's sole
responsibility shall be to exercise customary care and diligence in effecting
the delivery as instructed and collecting payment therefor. Notwithstanding the
foregoing, if the delivery and/or receipt is effected through the facilities of
a Depository, Custodian's responsibilities shall be limited to using customary
care and diligence in verifying proper consummation of the transaction by the
Depository. Upon completion of a delivery, Custodian shall be discharged
completely of any liability or responsibility from claims with respect to the
safekeeping and custody of Account Securities which may occur at a time
subsequent to the period in which Custodian had control over the Account
Securities. Nothing herein shall relieve the Custodian of responsibility for
any act or omission to act of Custodian which occurred prior to the completion
of such a delivery.
(c) DELIVERY AGAINST PAYMENT. In accordance with Instructions, Custodian
will deliver or cause to be delivered the Account Securities thus designated as
sold for the Custodian Account of Company to the broker or other person
specified in the Instructions relating to such sale, such delivery to be made
only upon receipt of payment therefor in such form as shall be satisfactory to
Custodian and Company, with the understanding that Custodian may deliver or
cause to be delivered Account Securities for payment in accordance with the
reasonable customs prevailing among dealers in securities.
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(d) TIMELY INSTRUCTIONS. Company, or its Investment Adviser, as the case
may be, shall be responsible for ensuring that Custodian receives timely,
correct and complete Instructions to enable Custodian to effect settlement of
any purchase of Securities or sale of Account Securities on the contract
settlement date. If Custodian does not receive such Instructions within a
reasonable time prior to the contract settlement date and Custodian notifies
Company of the absence of such Instructions, Custodian shall have no liability
of any kind to any Person for failing to effect settlement on the contract
settlement date.
(e) LIMIT OF RESPONSIBILITY. Custodian, in its capacity as such, shall
have no responsibility to manage or recommend investments of Account Securities
or to initiate or effect any purchase, sale, or other investment transaction in
the absence of Instructions from Company or the Investment Adviser. Custodian
shall hold cash in the Custodian Account, subject to receipt of such
instructions, without liability for interest thereon; provided, however, that
should any cash remain in the Custodian Account said cash shall be swept, daily,
into an investment vehicle chosen by Company, subject to the terms and
conditions applicable to such investment vehicle. Custodian shall in no event
be responsible or liable for:
(i) the validity of the issue of any Securities purchased by Company,
the legality of the purchase thereof, or the propriety of the amount
paid therefor;
(ii) the legality of the sale of any Securities by Company, or the
propriety of the amount for which the same are sold;
(iii) the legality or propriety of any borrowing or loan by Company; or
(iv) any money, whether or not represented by any check, draft or other
instrument for the payment of money, received by it on behalf of Company
until Custodian actually receives and collects such money directly by the
final crediting of the Custodian Account or the Account representing
Company's interest in the Depository.
(f) CORPORATE ACTIONS. In no event shall Custodian be responsible to
ascertain or to take any action concerning, any maturities, puts, calls,
conversions, exchanges, reorganizations, voting of proxies, offers, tenders or
similar matters relating to Account Securities, whether physically held by
Custodian or on deposit with a Depository, other than to deliver to Company and,
if directed by Company, to its Investment Adviser, notices and information
relating to any such corporate action received by Custodian from any issuers,
offerors, or otherwise. Custodian's sole responsibility in this regard shall be
to deliver promptly to Company or its Investment Adviser, as the case may be,
such notices proxies, offers tenders or similar matters and properly signed
proxies after Custodian receives them, and Custodian shall not otherwise act
with respect to any such notice unless and until Custodian has received
appropriate Instructions from Company or the Investment Adviser, as the case may
be. Company agrees and will instruct its Investment Adviser that any
Instructions to Custodian with respect to any such corporate actions must be
delivered to Custodian within sufficient time for Custodian to act thereon if
any action by Custodian is required. As used herein, "sufficient time" shall
mean at any time up to the last permissible hour on the date for action
specified by Custodian in
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Custodian's written notice hereunder and Custodian shall have no liability to
any person for Custodian's failure to act upon any such Instructions for the
Custodian Account received by Custodian at any time after such hour and date.
(g) ALLOCATION OF PARTIAL REDEMPTION. Should any Account Securities held
in a Depository be called for a partial redemption by the issuer of such
securities, Custodian is authorized to accept allocation as determined pursuant
to the program therefor then in effect at such Depository or, in the absence of
any such program, Custodian's sole discretion to allot the called portion to the
respective holders in any manner deemed to be fair and equitable in its
judgment.
(h) FOREIGN SECURITIES. With respect to Account Securities issued by
foreign entities or other Account Securities for which adequate corporate
information is not readily available, Custodian's responsibility is expressly
limited to safekeeping. With respect to such Account Securities, Custodian
assumes no responsibility for following such Account Securities or their issuers
for coupon payments, redemptions, exchanges or similar matters affecting such
Account Securities. Collections of monies in foreign currency, to the extent
possible, will be converted into U.S. dollars at customary rates in accordance
with Custodian's normal procedures. All risks and expenses incident to such
foreign collections and conversions are assumed by the Custodian Account, and
Custodian shall have no responsibility for fluctuations in exchange rates
affecting such collections or conversions.
(i) PROCEEDS. Unless Company is informed otherwise in writing by
Custodian, the proceeds of sales, redemptions, collections, and other receipts,
and dividend and interest income will be credited, subject to collection, by
Custodian to the Custodian Account promptly upon receipt and in no event later
than the availability schedule attached hereto, marked Exhibit D and by this
reference incorporated herein.
(j) EXCHANGES. Custodian is authorized, without Instructions, to exchange
temporary for definitive certificates and old certificates for new or
overstamped certificates evidencing a change therein.
(k) DEPOSITORY DELIVERIES. In complying with Instructions for delivery of
eligible transactions, Custodian will make deliveries through (i) the Federal
Reserve System, pursuant to Subpart 0 of the Treasury Department Circular #300
(31 Code of Federal Regulations Part 306), and operating circulares of the
Federal Reserve Bank of New York, or (ii) the facilities of any other Depository
pursuant to Section 8-320 of the New York Uniform Commercial Code and the Rules
and Procedures of such Depository.
(l) AVAILABLE FUNDS. Custodian is not obligated to effect any transaction
or make any payment in connection therewith unless there are sufficient
available funds on deposit in the Custodian Account or funds have otherwise been
made available to Custodian therefor to its satisfaction. Should Custodian not
effect a transaction or make a payment it shall immediately notify Company of
such fact so that Company may make appropriate alternate arrangements to
effectuate the transaction or make the payment. The amount by which payments
made by Custodian with respect to property in, or to be received for, the
Custodian Account, or with respect to other transactions pursuant to this
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Agreement, exceed available funds and result in an account overdraft shall be
deemed a loan from Custodian to Company, payable on demand and bearing interest
at the then current rate customarily charged by Custodian on similar loans. All
such loans shall be based on Custodian's sole determination to make the
underlying advance in each case.
(m) MANDATORY EXCHANGE. Anything in paragraph 5(f) to the contrary
notwithstanding, Custodian will, without Instructions, surrender and exchange
Account Securities for other Securities in connection with any maturity,
reorganization, recapitalization, or similar transaction in which the owner of
the Account Securities is not given an option; provided, however, Custodian
shall be responsible to effect any such exchange only upon receiving actual
notice of the event permitting or requiring such exchange. For purposes of this
subparagraph, actual notice shall mean notice that is received by Custodian from
the issuer of the Security, the agent of the issuer of the Security, a
nationally recognized subscription service, the Company, or from any other
source which would enable Custodian to act in a commercially reasonable manner.
To facilitate any such exchange, Custodian is authorized to surrender against
payment maturing Obligations and Obligations called for redemption; provided,
however, that Custodian deliver to Company notice of such exchange five (5)
business days prior to the actual exchange taking place.
(n) RECEIPT OF PAYMENTS. Subject to the provisions of this Agreement, and
unless and until it receives Instructions to the contrary, Custodian is
authorized to:
(i) present for payment all coupons and other income items held in
the Custodian Account;
(ii) receive payments of interest and principal, dividends, warrants,
and other things of value in connection with Account Securities and
hold such payments in the Custodian Account, with notice thereof to
Company;
(iii) sign for Company all declarations, affidavits, certificates or other
documents that may be required to collect or receive payments or
distributions with respect to Account Securities and disclose, without
further consent of Company, Company's identity to issuers of Account
Securities, or the agents of such issuers, who may request such disclosure.
Recapitalization and stock distributions will be credited upon receipt to the
Custodian Account.
(o) LENDING OF ACCOUNT SECURITIES. Custodian shall have the power and
authority to lend Account Securities only in accordance with the terms of a
separate securities lending agreement, if any, entered into between Custodian
and Company.
6. REPORTS, BOOKS AND RECORDS
(a) RECORDS. On behalf of the Company, Custodian shall keep all original
books and records concerning the Account Securities held in the Custodian
Account and the security transactions directed by Company or its Investment
Adviser. The books and records pertaining to Company that are in the
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possession of Custodian shall be the property of Company. Upon the reasonable
request of Company, copies of any such books and records shall be provided by
Custodian to Company or Company's authorized representative.
(b) REPORTS AND STATEMENTS. Books and records prepared and maintained by
Custodian pursuant to this Agreement shall promptly post each transaction to the
appropriate Custodian Account, as specified in Instructions. Custodian shall
make available to Company, by POL*ARIS or in the manner otherwise agreed upon,
transaction reports and a summary of the transfers to or from the Custodian
Account during said business day. Custodian shall make available to Company, by
POL*ARIS or in the manner otherwise agreed upon, a statement of transactions and
holdings in the Custodian Account on a monthly basis or at such other intervals
as Custodian and Company shall mutually agree. Said monthly reports shall be
delivered to Company prior to the fifth (5th) business day of each calendar
month.
(c) ADDITIONAL BOOKS AND RECORDS. In addition to its internal record
requirements, Custodian shall create and maintain such books and records and
provide such reports with respect to the Custodian Account as Custodian and
Company shall agree upon from time to time.
(d) INSPECTION. The books and records of Custodian pertaining to the
Custodian Account shall be open to inspection and audit at reasonable times by
duly authorized officers, employees and auditors employed by Company. The costs
incurred by Custodian in connection with routine periodic inspections and audits
shall be borne by Custodian. Any such costs incurred in connection with
extraordinary inspections and audits shall be charged to and paid by Company.
(e) OPINION OF COMPANY'S INDEPENDENT ACCOUNTANT. Custodian shall take all
reasonable actions, as Company may from time to time request, to enable the
Company to obtain from year to year favorable opinions from Company's
independent accountants with respect to Custodian's activities hereunder.
(f) REPORTS BY CUSTODIAN'S INDEPENDENT PUBLIC ACCOUNTANTS. Custodian
shall provide Company no less frequently than once per year with reports by
independent public accountants on Custodian's system of internal accounting
control relating to the services provided by Custodian under this Agreement.
Such reports shall state that such system is sufficient to meet the objective of
providing management with reasonable, but not absolute, assurance that assets
for which custodian has responsibility are safeguarded against loss from
unauthorized use or disposition, and that transactions are executed in
accordance with appropriate authorizations and in conformity with the governing
instruments and are recorded properly to permit the preparation of the required
financial reports.
(g) OTHER REPORTS. Custodian shall provide Company with any report
received by Custodian on the system of internal accounting control of any
Depository and with any such reports on its own systems of internal or other
accounting control as Company may reasonably request from time to time.
(h) POL*ARIS. Company has the option to elect to participate in
Custodian's POL*ARIS Service, an electronic communications service that
provides, on a daily basis, the ability to view on-line
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or to print out hard copy of all transactions involving the delivery in and out
of Account Securities on a free or payment basis, payments of principal and
interest or dividends, pending transactions and fails, and schedules of
Custodian Account holdings.
(i) SECURITY OF TERMINAL. In the event that Company subscribes
to the POL*ARIS Service, Company shall be fully responsible for the
security of its Connecting terminal(s), access thereto and the proper
and authorized use thereof, and Company's initiation and application
of continuing effective safeguards. In this connection, except for
any instance involving Custodian's own negligence, willful misconduct
or bad faith, and in addition to any other undertakings by Company in
this Agreement, Company agrees to defend and indemnify Custodian and
to hold Custodian harmless from and against any and all suits,
actions, proceedings at law or in equity, claims (groundless or
otherwise), liabilities, losses, damages, payments, settlements,
penalties, fines, costs (including fees and disbursements of counsel
selected by Custodian) and every other expense of every nature
asserted against or incurred by Custodian as a result of any improper
or unauthorized use of such terminal(s) whether on the premises of
Company, an Investment Adviser, or the agent of either; but not
including Custodian or any agent thereof.
(ii) PRICING SERVICES. To the extent that the POL*ARIS Service
provided hereunder shall include market values of the Custodian Account
holdings, Custodian may, at its discretion, obtain such information from
outside sources that Custodian reasonably deems to be reliable. Custodian
does not verify, represent or warrant either the accuracy or the
completeness of any such information transmitted through the POL*ARIS
Service.
7. INVESTMENT ADVISERS AND INVESTMENTS
(a) APPOINTMENT OF INVESTMENT ADVISERS. Company may appoint one or more
Investment Advisers to manage the assets held in the Custodian Account. The
terms and conditions of appointment and authority of any Investment Adviser
shall be the sole responsibility of Company. Company shall promptly notify
Custodian by means of Instructions of the appointment and removal of an
Investment Adviser, the portion of the Custodian Accounts that are subject to
the investment control of such Investment Adviser and all other facts pertinent
to such Investment Adviser's authority to give Instructions, including a
designation of the Authorized Persons of such Investment Adviser.
(b) INVESTMENT REVIEW. Custodian shall be under no duty or obligation to
review any investment or reinvestment made or received upon the Instructions of
Company or any Investment Adviser. Without limiting the generality of the
foregoing, with respect to each transaction, the Authorized Person giving the
Instructions shall have the entire responsibility for assuring that the
transaction does not violate the prohibitions of any applicable state or federal
law, applicable Investment Adviser agreement, any restrictions or guidelines
applicable to the Investment Adviser in an Investment Adviser agreement, or
court order or judgment affecting the administration of the Custodian Account or
adversely affect the tax treatment of the Custodian Account.
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8. AGENTS, DEPOSITORIES AND SUB-CUSTODIANS
(a) AGENTS. Custodian may at any time or from time to time, appoint at its
own expense, (and may at any time remove) any other bank, trust company or
responsible commercial agent as its agent to carry out such of the provisions of
this Agreement as Custodian may from time to time direct, PROVIDED THAT the
appointment of any such agent shall not relieve Custodian of any of its
responsibilities and liabilities under this Agreement.
(b) SUB-CUSTODIANS AND DEPOSITORIES. Custodian may appoint at its own
expense and risk one or more banking institutions or Depositories, domestic or
foreign, to act as Sub-Custodian or as Depository of Account Securities,
PROVIDED THAT Company shall have informed Custodian by means of Instructions
that such entity has been approved by all requisite action as a Sub-Custodian or
Depository for Account Securities and Custodian shall have received no
subsequent Instructions rescinding such approval, and FURTHER PROVIDED THAT the
appointment of any Sub-Custodian or Depository shall not relieve Custodian of
any of its responsibilities or liabilities under this Agreement.
9. LEGAL PROCEEDINGS
Other than legal proceedings which are initiated in response to Custodian's
willful misconduct, negligence or bad faith, Custodian shall not be required to
initiate, appear in or defend any legal proceedings or take any other similar
action with respect to the Custodian Account or Account Securities unless
Custodian has been indemnified to its satisfaction against any loss and expense
(including attorneys' fees) likely to be suffered or incurred thereby.
Notwithstanding anything herein to the contrary, Custodian shall be required to
affirmatively assist Company in any legal proceeding or similar action with
respect to the Custodian Account Securities.
10. INDEMNIFICATION OF CUSTODIAN
(a) INDEMNIFICATION. In its capacity as Custodian, Custodian shall not be
liable for any act or failure to act of Company or Company's Investment Adviser.
Custodian shall not be liable for any error of judgment or mistake of law or,
except as expressly provided to the contrary in paragraph 4, for any loss
suffered by the Custodian Account unless resulting from willful misconduct, bad
faith or negligence on the part of Custodian in the performance of its duties or
from the disregard by Custodian of its obligations and duties under this
Agreement. Except as otherwise expressly provided to the contrary in the
preceding sentence, Custodian shall be indemnified against and held harmless
from any and all suits, actions, proceedings at law or in equity, claims
(groundless or otherwise), liabilities, losses, damages, payments, settlements,
penalties, fines, costs (including fees and disbursements of counsel selected by
Custodian and approved by Company, which approval shall not be unreasonably
withheld) and every other reasonable expense of every nature asserted against or
incurred by Custodian in any way arising from Custodian's appointment hereunder.
If amounts due Custodian pursuant to this paragraph 10 are not paid out of the
Custodian Account for any reason, they shall be paid by Company. Custodian
agrees to inform Company in writing of any event which comes to its notice as a
result of which the Custodian Account or Company might become liable to
indemnify Custodian under these
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provisions, provided that any reasonable delay in so doing shall not in any way
affect the Custodian Account's or Company's obligation to Custodian hereunder.
Custodian's right to indemnification shall survive the termination of this
Agreement.
(b) PARTICIPATION IN LITIGATION. In the event any action or proceeding
shall be brought against Custodian, in its capacity as such, it shall notify
Company of the commencement thereof, and, subject to all provisions hereof and
to the extent that it shall wish, Company shall be entitled to participate
therein or to assume the defense thereof. After notice from Company to
Custodian of its election so to assume the defense of such action or proceeding
and to pay all fees and expenses of such counsel, Company shall not be liable to
Custodian for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by Custodian, in connection with the defense thereof
other than reasonable costs of investigation, unless either Company or Custodian
shall have been advised at any time by counsel, agreeable to both Company and
Custodian, that the assumption or continuation of such defense by Company would
be inappropriate under applicable standards of professional conduct on account
of actual or potential differing interests between Company and Custodian or
under fiduciary principles applicable to the Custodian Account. Custodian may,
at any time, waive its right to indemnification hereunder and assume its own
defense.
(c) BREACH OF REPRESENTATION OR WARRANTY. Company's liability under the
foregoing indemnification shall cover, without limitation, all loss, liability,
claims, damages and expenses resulting from a breach of any representation or
warranty delivered herein by Company.
11. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents, warrants and covenants to Custodian that:
(a) the employment of Custodian and the allocation of fees, expenses and
other charges to the Custodian Account as herein provided, is not prohibited by
law or any governing documents or contracts relating to the Custodian Account or
the maintenance of custodian accounts for Company as contemplated herein;
(b) the terms of this Agreement do not violate any obligation by which
Company is bound, whether arising by contract, operation of law or otherwise;
(c) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon Company in accordance with its
terms;
(d) Company will deliver to Custodian such evidence of such authorization
as Custodian may reasonably require, whether by way of a certified resolution,
opinion of counsel or otherwise;
(e) Custodian, in its capacity as such, is not required to maintain any
fidelity bond insurance with respect to Account Securities pursuant to the
requirements of any law applicable to Company;
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(f) Company has furnished Custodian the names and original or facsimile
signatures of all Authorized Persons currently authorized to act on behalf of
Company pursuant to this Agreement; and
(g) with respect to matters covered by this Agreement, Custodian shall be
entitled to assume any document delivered herewith remains in effect and any
Authorized Person or Investment Adviser named herein or pursuant hereto
continues to be authorized to act hereunder until Custodian is notified by means
of Instructions as to any amendment, change or substitute.
12. REPRESENTATIONS AND WARRANTIES OF CUSTODIAN
Custodian hereby represents, warrants and covenants to Company that:
(a) the terms of this Agreement do not violate any obligation by which
Custodian is bound, whether arising by contract, operation of law or otherwise;
(b) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon Custodian in accordance with its
terms;
(c) Custodian will deliver to Company such evidence of such authorization
as Company may reasonably require, whether by way of a certified resolution,
opinion of counsel or otherwise;
(d) Custodian, in its capacity as such, is not required to maintain any
fidelity bond insurance with respect to Account Securities pursuant to the
requirements of any law applicable to Custodian;
(e) Custodian has furnished Company the names of all Persons currently
authorized to act on behalf of Custodian hereunder; and
(f) with respect to any matters covered by this Agreement, Company shall
be entitled to assume any document delivered herewith remains in effect and any
Person named herein or pursuant hereto continues to be authorized to act
hereunder until it is notified of any amendment, change or substitute.
13. FEES, EXPENSES AND OTHER CHARGES
(a) FEE SCHEDULES. For the services provided hereunder, Company shall pay
Custodian monthly in arrears a fee calculated and accrued in accordance with
Custodian's applicable fee schedule set forth in Exhibit E, attached hereto and
as amended from time to time made a part hereof. Such fee schedule does not
include reasonable out-of-pocket disbursements of Custodian for which Custodian
shall be entitled to be reimbursed by Company. Except for fees and expenses
which are the result of Custodian's negligence, willful misconduct or bad faith,
Custodian shall be entitled to reimbursement for all reasonable out-of-pocket
fees and expenses of counsel arising from the performance of Custodian's duties
hereunder, such reasonable out-of-pocket disbursements, fees and expenses shall
include but shall not be limited to the items specified in Exhibit F, attached
hereto. Exhibit F may be modified by Custodian upon not less than sixty (60)
days prior written notice to Company.
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(b) PAYMENT. Custodian will invoice Company as soon as practicable after
the end of each calendar month and said invoices will be detailed in accordance
with the applicable fee schedule(s) and will include reimbursable out-of-pocket
disbursements.
14. TERM AND TERMINATION
(a) TERM. This Agreement shall become effective on the date first set
forth above.
(b) NOTICE OF TERMINATION. Company may terminate this Agreement and the
Custodian Account upon thirty (30) days written notice to the Custodian. The
Custodian may terminate this Agreement and the Custodian Account upon ninety
(90) days written notice to the Company.
(c) DELIVERY OF ACCOUNT SECURITIES AND OTHER PROPERTY. Upon termination,
Custodian shall deliver in proper form for transfer all Account Securities
specified in the notice of termination, or cause such to be delivered, to a
successor custodian designated by Company or, if a successor custodian has not
accepted an appointment by the effective date of termination of the Custodian
Account, to Company if the Board of Directors or Board of Trustees of the
Company has authorized the Company to maintain the custody of its own assets in
accordance with Rule 17f-2 under the 1940 Act, and if not, then to a custodian
appointed by a court of competent jurisdiction. Custodian shall be entitled to
be reimbursed for any reasonable expenses incurred in connection with such
delivery unless such termination is at Custodian's request. Custodian agrees to
cooperate with Company and any substitute or successor custodian appointed by
Company during a reasonable transition period.
(d) In the event a notice of termination is given by Custodian, Company
shall, on or before the specified termination date, deliver to Custodian a
resolution of the Board of Directors Company designating a successor custodian
or custodians. In the absence of such designation by Company, Custodian shall
deliver all of the effected Account Securities to the designee of Company which
will, upon delivery, be deemed to be the successor custodian.
15. TAXES
(a) FILINGS. Custodian shall have no responsibility to file any tax
returns regarding the Custodian Account or the Account Securities. Custodian is
authorized and empowered to execute any certificates of ownership or other
reports, declarations or affidavits that it is or may hereafter be required to
execute and furnish under any regulation of the Internal Revenue Service, or by
or under any other authority of the United States or any jurisdiction, which are
required in connection with any property that is now or may hereafter be held in
the Custodian Account. The authority granted to Custodian in this section 15 is
conditioned upon Company's prior exhaustion of all its rights of challenge and
appeal regarding said regulations or United States authority. Company agrees to
notify Custodian immediately in writing of any material change in status that
may affect any such certificates, reports or other required documents or the
contents thereof.
(b) INDEMNIFICATION. Company agrees to indemnify the Subcustodian and any
nominee in whose name Account Securities or other property of Company is
registered against any liability
14
<PAGE>
Custodian or such nominee may incur by reason of taxes assessed to Custodian or
such nominee resulting directly or indirectly from the fact that Account
Securities or other property of Company are registered in the name of Custodian
or such nominee; PROVIDED, HOWEVER, said indemnity obligation is subject to
Company's prior exhaustion of all lawful or legal challenge or appeal rights
regarding any tax or related liability. Custodian's right to indemnification as
aforesaid shall survive the termination of this Agreement.
16. ADVICE
Custodian may from time to time consult with counsel to Company or with an
Authorized Person in connection with its obligations arising hereunder and shall
be fully protected in acting upon the written advice or instructions of such
counsel or Authorized Person, as the case may be.
17. ADDRESSES
Except as provided to the contrary with respect to Instructions and until
further notice from either party, any notices delivered pursuant to this
Agreement, and all other communications shall be in writing and shall be
delivered or sent to the following addresses or such other addresses as from
time to time may be specified hereunder:
If to Company:
Farm Bureau Insurance Companies
5400 University Avenue
West Des Moines, IA 50266
Attn: Investment Accounting
If to Custodian:
Banker's Trust
16 Wall Street
New York, N.Y. 10005
Attn: David F. Hoyt
All notices and other communications shall be effective when received. The
party seeking to rely on notice having been given under this paragraph 16 shall
be responsible for ascertaining the facts thereof.
18. MISCELLANEOUS
(a) INFORMATION TO AND CONSENT OF CUSTODIAN. During the term of this
Agreement, Company shall furnish to Custodian at its office, prior to any
distribution thereof, copies of any materials prepared for distribution to any
Persons who are not parties hereto that refer in a material way to Custodian.
Company shall not distribute or permit the distribution of such materials if
Custodian reasonably objects in writing within five (5) business days (or such
other time as may be mutually
15
<PAGE>
agreed) after receipt thereof. Company shall
furnish or otherwise make available to Custodian such other information relating
to the business affairs of Company as Custodian at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
(b) SCOPE OF THE AGREEMENT. This Agreement contains the whole of the
understanding between the parties with respect to the subject matter hereof.
(c) AMENDMENT. This Agreement may be amended at any time by a written
instrument signed by an Authorized Person of Company and by a duly authorized
officer of Custodian.
(d) SEVERABILITY. If any provision of this Agreement is determined to be
invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provisions of this Agreement.
(e) NO WAIVER. No term or provision hereof shall be deemed waived and no
breach excused unless such waiver or consent shall be in writing and signed by
the party claimed to have waived or consented. No waiver of any term or
provision hereof shall be deemed a continuing waiver unless it is so designated.
Any consent by any party to a breach by the other, whether express or implied,
shall not constitute a consent to or excuse for any other breach.
(f) CAPTIONS. The captions of this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(g) ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, successors, and assigns; PROVIDED
HOWEVER, this Agreement shall not be assignable by Company without the written
consent of Custodian, or by Custodian without the written consent of Company,
and any attempted assignment without such written consent shall be null and
void.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
FARM BUREAU LIFE INSURANCE BANKERS TRUST COMPANY
COMPANY
By: By:
--------------------------- ----------------------
--------------------------- ----------------------
Its: Its:
--------------------- ----------------
16
<PAGE>
APPENDIX A:
MUTUAL FUND CUSTODY ACCOUNT-
FBL MONEY MARKET FUND, INC.
THIS MUTUAL FUND CUSTODY ACCOUNT AGREEMENT (hereinafter the "Appendix"),
dated January 12, 1993, is entered into by and between FBL MONEY MARKET FUND,
INC., a Maryland corporation ("Company") and BANKERS TRUST COMPANY, a New York
banking corporation ("Bankers Trust").
WHEREAS, both Bankers Trust and Company desire to have the Mutual Fund
Custody Account- FBL Money Market Fund, Inc. governed by the terms and
provisions of the Custodian Account Agreement dated December 15, 1992 (the
"Agreement"), as hereby amended;
NOW, THEREFORE, in consideration of the mutual covenants contained in the
Agreement and this Appendix and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. Section 1 entitled DEFINITIONS is amended as follows:
(d) "DEPOSITORY" means any centralized securities depository system,
domestic or foreign, whether presently or hereafter organized, in which
Custodian participates, and shall include (i) the Depository Trust Company, (ii)
the Federal Reserve Book-Entry System, (iii) the Participant's Trust Company, or
(iv) any other centralized securities depository system selected by Custodian,
but subject to the approval of Company's Board of Directors or Trustees and any
required approval by regulatory authorities applicable to Custodian in the
conduct of its business as Custodian. The term "Depository" shall further mean
and include any other person to be named in a certificate issued by Custodian
and approved by Company's Board of Directors or Company's Board of Trustees and
authorized to act as a depository under the 1940 Act, including its successor or
successors and its nominee or nominees.
(f) "INSTRUCTIONS" means a communication received by Custodian from one or
more Authorized Persons directing action or delivering information pursuant
thereto in regard to Company's Account Securities, Securities or Portfolios.
Instructions may be oral or written and may be delivered (i) by telephone, (ii)
in hard copy, or (iii) by computer, electronic instruction system or
telecommunications terminals, which shall include but not be limited to, a
telex, a TWXS, a facsimile transmission, a bank wire or Custodian's proprietary
POL*ARIS Service; PROVIDED,HOWEVER, THAT the Parties hereto or Custodian and
Investment Adviser, as the case may be, shall have agreed herein to the form,
the means of transmission and the means of identification of such Instructions;
FURTHER PROVIDED THAT Instructions initially given orally shall be confirmed
within the thirty (30) minute period immediately following the initial receipt
of the Instructions by Custodian in a manner consistent with clauses (ii) or
(iii) above. Instructions shall conform to operating procedures communicated
from time to time by Custodian to Company.
(k) "1940 ACT" refers to the Investment Company Act of 1940, and the Rules
and Regulations thereunder, all as amended from time to time.
17
<PAGE>
(l) "PORTFOLIO" means Account Securities grouped together in a separate
investment portfolio of Company. Company shall provide Custodian with a listing
of Company's Portfolios.
2. Section 6 entitled REPORTS, BOOKS AND RECORDS is amended as follows:
(a) RECORDS. On behalf of Company, Custodian shall keep all original
books and records concerning the Account Securities and the Security
transactions directed by Company or its Investment Advisor. The books and
records pertaining to Company that are in the possession of Custodian shall be
the property of Company. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities laws and
rules and regulations. Upon the reasonable request of Company, copies of any
such books and records shall be provided by Custodian to Company or Company's
authorized representative.
(b) REPORTS AND STATEMENTS. Books and records prepared and maintained by
Custodian pursuant to this Agreement shall reflect the prompt posting of each
transaction to the appropriate Custodian Account and Portfolio, as specified in
Instructions. Custodian shall make available to Company, by POL*ARIS or in the
manner otherwise agreed upon, transaction reports and a summary of the transfers
to or from the Custodian Account during said business day. Custodian shall make
available to Company, by POL*ARIS or in the manner otherwise agreed upon, a
statement of transactions and holdings in the Custodian Account on a monthly
basis or at such other intervals as Custodian and Company shall mutually agree.
Said monthly reports shall be delivered to Company prior to the fifth (5th)
business day of each calendar month.
(c) ADDITIONAL BOOKS AND RECORDS. In addition to its internal record
requirements, Custodian shall create and maintain such books and records and
provide such reports with respect to the Custodian Account as Custodian and
Company shall agree upon from time to time. Custodian is not the fund
accountant for Company. Custodian shall cooperate with the fund accountant and
shall make available to the fund accountant the transaction reports and
statements referred to in paragraph 6(b) above, but Custodian shall not be
responsible for reconciling books and records with those of the fund accountant
or for keeping books and records normally kept by the fund accountant.
(d) INSPECTION. The books and records of Custodian pertaining to the
Custodian Account shall be open to inspection and audit at reasonable times by
duly authorized officers, employees and auditors employed by Company and by
employees and agents of the Securities and Exchange Commission. The costs
incurred by Custodian in connection with routine periodic inspections and audits
shall be borne by Custodian. Any such reasonable costs incurred in connection
with extraordinary inspections and audits shall be charged to and paid in
accordance with paragraph 13.
3. Section 8 entitled AGENTS, DEPOSITORIES AND SUB-CUSTODIANS is amended as
follows:
(a) AGENTS. Custodian may at any time or from time to time, appoint at its
own expense, (and may at any time remove) any other bank, trust company or
responsible commercial agent as its agent to carry out such of the provisions of
this Agreement as Custodian may from time to time direct,
18
<PAGE>
PROVIDED THAT such agent agrees with custodian to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations thereunder; and
FURTHER PROVIDED THAT the appointment of any such agent shall not relieve
Custodian of any of its responsibilities and liabilities under this Agreement.
(b) SUB-CUSTODIANS AND DEPOSITORIES. Custodian may appoint at its own
expense and risk one or more banking institutions or Depositories, domestic or
foreign, to act as Sub-Custodian or as Depository of Account Securities,
PROVIDED THAT such entity agrees with Custodian to comply with all provisions of
the 1940 Act and applicable rules and regulations thereunder; and FURTHER
PROVIDED THAT Company shall have informed Custodian by means of Instructions
that such entity has been approved by all requisite action as a Sub-Custodian or
Depository for Account Securities and Custodian shall have received no
subsequent Instructions rescinding such approval; and FURTHER PROVIDED THAT the
appointment of any Sub-Custodian or Depository shall not relieve Custodian of
any of its responsibilities or liabilities under this Agreement.
4. Section 12 entitled REPRESENTATIONS AND WARRANTIES OF CUSTODIAN is amended
as follows:
(g) Custodian is qualified as a custodian under Section 26(a) of the 1940
Act and covenants that it will remain so qualified or upon ceasing to be so
qualified shall promptly notify Company in writing.
5. Section 13 entitled FEES, EXPENSES AND OTHER CHARGES is amended as follows:
(a) FEE SCHEDULES. For the services provided hereunder, Company shall pay
Custodian monthly in arrears a fee calculated and accrued in accordance with
Custodian's applicable fee schedule set forth in Exhibit E, attached hereto and
as amended from time to time made a part hereof. Such fee schedule does not
include reasonable out-of-pocket disbursements of Custodian for which Custodian
shall be entitled to be reimbursed by Company. Except for fees and expenses
which are the result of Custodian's negligence, willful misconduct or bad faith,
Custodian shall be entitled to reimbursement for all reasonable out-of-pocket
fees and expenses of counsel arising from the performance of Custodian's duties
hereunder, such disbursements, fees and expenses shall include but shall not be
limited to the items specified in Exhibit F, attached hereto. Exhibit F may be
modified by Custodian upon not less than sixty (60) days prior written notice to
Company.
(i) Should Company designate additional Portfolios after the date of
this Appendix, the parties hereto shall mutually agree upon the fee
due Custodian for the additional responsibilities assumed by Custodian
as a result of administering such newly created Portfolios. Such
mutually agreed upon fee shall be reflected in a written fee schedule
designated for that Portfolio which shall be dated, signed by an
officer of each party hereto, and attached to this Appendix as an
exhibit.
6. Section 14 entitled TERM AND TERMINATION is amended as follows:
19
<PAGE>
(b) NOTICE OF TERMINATION. Company may terminate this Agreement and the
Custodian Account upon thirty (30) days written notice to the Custodian,
PROVIDED THAT Company may terminate this Agreement and the Custodian Account
upon less notice if it receives notice from Custodian that it is no longer
qualified as a Custodian under Section 26(a) of the 1940 Act. The Custodian may
terminate this Agreement and the Custodian Account upon ninety (90) days written
notice to the Company.
(d) In the event that a notice of termination is given by Company, it shall
be accompanied by a certified resolution of the Company's Board of Directors or
Trustees electing to terminate this Agreement with respect to any custodian
account and designating a successor custodian or custodians, which the Company
shall deem to be an entity qualified to so act under the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Appendix to be
executed as of the day and year first above written.
FBL MONEY MARKET FUND, INC. BANKERS TRUST COMPANY
By: By:
---------------------------- ----------------------
---------------------------- ----------------------
Its:---------------------- Its:----------------
By: By:
---------------------------- ----------------------
---------------------------- ----------------------
Its:---------------------- Its:----------------
20
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
<TABLE>
<CAPTION>
SCOPE OF
NAME TITLE PHONE SIGNATURE AUTHORITY
- ---- ----- ----- --------- ---------
<S> <C> <C> <C> <C>
Richard D. Warming VP-Investments and Asst Treasurer (515) 225-5500 @
--------------------
Dennis M. Marker Investment Administration VP (515) 225-5522 @
--------------------
Janet Lamberts Mutual Funds Manager (515) 225-5523 @
--------------------
Sharon Jerdee Investment Accounting Manager (515) 225-5912 @
--------------------
Jeanne L. Westbrook Smith Cash Management Administrator (515) 225-5520 @
--------------------
Jody L. Kinseth Investment Staff Accountant (515) 225-5899 @
--------------------
Ann M. Grogan Securities Assistant (515) 225-5502 $
--------------------
Faith I. Schroeder Short Term Assistant (515) 225-5422 $
--------------------
Linda Koenig Investment Accounting Asst. (515) 225-5471 $
--------------------
Rita Kurimski Accounting Clerk (515) 225-5945 $
--------------------
</TABLE>
AUTHORITY
@ - Payment Versus Delivery With Out Dollar Limit; Free Deliveries, Limited to
Confirmation of Instructions Only
$ - Payment Versus Delivery With Out Dollar Limit; Free Deliveries, Limited to
Instructions Only
32
<PAGE>
EXHIBIT B
FARM BUREAU FAMILY OF FINANCIAL PLANNING SERVICES
LIST OF CUSTODY ACCOUNTS
Account Number Title
- -------------- -----
098629 FBL Money Market Fund, Inc.
098630 FBL Series Fund, Inc.
Growth Common Stock Portfolio
098631 FBL Series Fund, Inc.
High Grade Bond Portfolio
098632 FBL Series Fund, Inc.
High Yield Bond Portfolio
098633 FBL Series Fund, Inc.
Managed Portfolio
098634 FBL Series Fund, Inc.
Money Market Portfolio
098635 FBL Series Fund, Inc.
Blue Chip Portfolio
098636 FBL Variable Series Fund, Inc.
Growth Common Stock Portfolio
098637 FBL Variable Series Fund, Inc.
High Grade Bond Portfolio
098638 FBL Variable Series Fund, Inc.
High Yield Bond Portfolio
098639 FBL Variable Series Fund, Inc.
Managed Portfolio
098640 FBL Variable Series Fund, Inc.
Money Market Portfolio
098641 FBL Variable Series Fund, Inc.
Blue Chip Portfolio
098642 Farm Bureau Life Insurance Company
(Commissioner's)
098643 Farm Bureau Life Insurance Company
098644 FBL Insurance Company
(Commissioner's)
098645 FBL Insurance Company
098646 Farm Bureau Mutual Insurance Co.
098647 Utah Farm Bureau Insurance Company
098648 South Dakota Farm Bureau Mutual
Insurance Company
098649 Iowa Farm Bureau Federation
098650 Universal Assurors Life Insurance Co.
33
<PAGE>
EXHIBIT C
FARM BUREAU FAMILY OF FINANCIAL PLANNING SERVICES
AUTHORIZED PERSONNEL OF CUSTODIAN
Name Title
---- -----
Elizabeth Cuevas Administrative Assistant
George Flores Account Administrator
Marlene Maynard Assistant Treasurer
Richard McCormick Assistant Treasurer
Peter Mistretta Assistant Vice President
John Ricciardi Assistant Treasurer
Kashim Skeete Assistant Vice President
Bradford Smith Account Administrator
Lorraine Squires Assistant Treasurer
Marva White Assistant Treasurer
34
<PAGE>
EXHIBIT D
FARM BUREAU FAMILY OF FINANCIAL PLANNING SERVICES
INCOME COLLECTION STANDARDS
PD = Payable Date, PD + 1, 2, 3 = One business day after Payable Date, Two
business days, Three business days.
CH = Clearing House Funds, FF = Fed Funds
<TABLE>
<CAPTION>
Form of
Security Type Income Posting Funds
- ------------- -------------- -------
<S> <C> <C>
CMO's
Principal and interest PD + 1** FF
Interest Only PD FF
Cedel / Euro-clear Securities (US $) PD +1 CH
Cedel / Euro-clear Securities (non - US $) PD +3**** CH US$
Coupon Bonds PD CH
DTC Equities (announced) PD FF
DTC Equities (unannounced) When received by BTCo. FF
DTC Fixed Income PD FF
DTC Variable Rates PD CH
Fed. Book Entry PD FF
Fed. Housing Authority Notes PD + 3 CH
Fixed Rate Physical Bonds PD CH
Foreign Securities Upon collection and conversion to US$ CH
Interest Bearing CDs and Deposit Notes PD*** CH
Money Market Preferreds PD + 1 FF
Pass-through Mortgages PD + 3 CH
Physical Equities PD CH
PTC GNMAs (P&I) PD FF
Physical GNMAs (P&I) PD + 2 FF
Physical U.S. Agencies PD + 2 FF
Private Placements When received by BTCo. CH / FF*
Small Business Admin. Loan Certificates When received by BTCo. CH
Unit Investment Trusts PD CH
Variable Rate Physical Bonds PD CH
</TABLE>
* In whichever form funds are received by BTCo.
** Except final paydown, which is paid upon collection in like funds.
*** Those requiring presentation will be paid upon collection in like funds.
**** Provided foreign exchange transaction has been completed by the depository.
35
<PAGE>
EXHIBIT E - PAGE 1
FARM BUREAU FAMILY OF FINANCIAL PLANNING SERVICES
CUSTODY FEE SCHEDULE
<TABLE>
<CAPTION>
Product / Service Price
- --------------------------------------------------------------------------------
<S> <C>
Maintenance $ 75.00
Depository Bonds $ 1.25
Vault Bonds 2.50
Depository Stock 1.25
Vault Stock 2.50
FBE Automated 12.00
FBE Manual 17.00
DTC Automated 9.00
DTC Manual 14.00
DTC ID 6.00
PTC Automated 12.00
PTC Manual 17.00
Physical Automated 20.00
Physical Manual 25.00
Mortgage Backed Principal & Interest 5.00
Private Placement Income 15.00
DTC SDFS Surcharge 5.00
Maturities 6.00
Reorganizations 40.00
Cedel Asset Value .0166 b.p.
Foreign Custody Asset Value .0500 b.p.
Cedel / Euro-CD Transactions 15.00
Foreign Custody Transactions 100.00
Master Limited Partnerships (per CUSIP) 100.00
Money Movements 5.00
POL*ARIS Maintenance 300.00
Per Record Fee .00
</TABLE>
36
<PAGE>
EXHIBIT E - PAGE 2
FARM BUREAU FAMILY OF FINANCIAL PLANNING SERVICES
CASH MANAGEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
Product / Service Price
- ----------------- -------
Cash Connector
- --------------
<S> <C>
BTC Report Accounts (per account) $ 80.00
Money Transfer Repetitive Payment 30.00
Money Transfer A
- ----------------
Cash Connector / SWIFT (input) $ 2.00
Fed / CHIPS / Book Payments 3.00
Fedwire Surcharge .53
Book Transfers 1.00
Repair Surcharge 1.00
Drawdown Request 4.00
Urgent Form
Micro Cash Connector 2.75
Custodian Administrator Remit 10.00
Money Transfer B
- ----------------
Fedwire / CHIPS / Book Receipts $ 3.00
Mail Advice .50
SWIFT Advice .50
Book Transfer Receipt 0.00
Statement Rendition
- -------------------
Maintenance (per account) $ 20.00
Additional Statements (no charge for first statement) 2.00
Credit / Debit Postings .25
FDIC Assessment
- ---------------
Per $100 of the average ledger balances maintained on the
FDIC call dates $ .23
Overdraft Charges
- -----------------
Reserve costs plus additional charge based on prime rate
</TABLE>
37
<PAGE>
EXHIBIT F
FARM BUREAU FAMILY OF FINANCIAL PLANNING SERVICES
OUT-OF-POCKET REIMBURSABLE EXPENSES
Postage
Insurance
Re-registration charges
Shipping Expenses (Overnight Courier)
Custodian will make every attempt to keep out-of-pocket expenses as reasonable
as possible.
38
<PAGE>
FIDELITY BOND
JOINT INSUREDS AGREEMENT
THIS AGREEMENT is made this 10th day of August, 1988, by and between FBL MONEY
MARKET FUND, INC. ("Money Fund"), FBL SERIES FUND, INC. ("Series Fund") both
Maryland corporations; FBL Variable Insurance Series Fund ("Insurance Series
Fund") and FBL Institutional Series Fund ("Institutional Series Fund") both
Massachusetts business trusts (collectively the "Funds").
The Funds, all of which are managed by FBL Investment Advisory Services, Inc.,
have acquired a joint insured brokers blanket bond issued by the Employers
Mutual Casualty Company effective September 26, 1976 ("Bond"). The aggregate
amount of the Bond ("Bond Amount") is equal to the summation of the "Basic
Coverage" for each Fund, as indicated in Exhibit A attached hereto. The Funds
desire to provide herein for an allocation of the premium for the Bond and a
manner of allocating any proceeds received from the Bond.
The Funds, therefore, agree that:
1. ALLOCATION OF PREMIUM. Each Fund shall pay a portion of the annual
joint Bond premium as agreed to in writing no less often than annually
by the Funds and attached hereto as Exhibit A. These amounts are
determined on the basis of the relative costs to each Fund of a single
insured bond in the amount of that Fund's Basic Coverage as indicated
in Exhibit A.
2. LOSS TO ONE FUND. In the event of an insured loss to only one Fund,
the entire proceeds from the Bond for that loss shall be allocated to
the Fund incurring such loss.
3. LOSS TO MORE THAN ONE FUND.
(a) LOSS PERCENTAGES. For purposes of allocating the coverage of
the Bond, each Fund shall have a Loss Percentage as indicated in
Exhibit A, which percentages are based upon the percentage of the
total Bond coverage represented by the amount of each Fund's
Basic Coverage.
(b) INITIAL ALLOCATION. Each Fund involved in an insured loss which
involves another Fund shall receive a portion of the proceeds
from the Bond equal to the lesser of ( i ) the amount of that
Fund's loss or (ii) an amount equal to the product of the Bond
Amount multiplied by that Fund's Loss Percentage, which initial
allocation assures that each Fund shall receive the full amount
of its loss up to the amount of its Basic Coverage.
(c) SUBSEQUENT ALLOCATIONS. Any Bond proceeds unallocated after the
initial allocation shall be
<PAGE>
allocated to the Funds for which the loss was not covered by the
initial allocation.
4. AGENT. Series Fund is hereby appointed as the agent for the Funds for
the purpose of making, adjusting, receiving and enforcing payment of
all claims under the bond and otherwise dealing with Employers Mutual
Casualty Company with respect to the Bond. Any expenses incurred by
Series Fund in its capacity as agent in connection with a claim shall
be shared by the Funds in proportion to the Bond proceeds received by
the Funds for the loss. All other expenses incurred by Series Fund in
its capacity as agent shall be shared by the Funds in the same portion
as their Loss Percentages.
5. MODIFICATION AND TERMINATION. This Agreement may be modified or
amended from time to time by mutual written agreement among the Funds.
It may be terminated with respect to any one Fund by not less than 75
days' written notice to the other Funds. It shall terminate as of the
date that any Fund ceases to be an insured under the Bond; provided
that such termination shall not affect such Fund's rights and
obligations hereunder with respect to any claims on behalf of such
Fund which are paid under the Bond by Employers Mutual Casualty
Company after the date such Fund ceases to be an insured under the
Bond.
6. FURTHER ASSURANCES. Each Fund agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
IN WITNESS WHEREOF, the Funds have caused this Agreement to be executed as of
the day and year first above written.
Attest: FBL MONEY MARKET FUND, INC.
By:
- ----------------------- -------------------------------
Its Assistant Secretary Its Vice President
Attest: FBL SERIES FUND, INC.
By:
- ----------------------- -------------------------------
Its Assistant Secretary Its Vice President
Attest: FBL VARIABLE INSURANCE SERIES FUND
By:
- ----------------------- -------------------------------
Its Assistant Secretary Its Vice President
<PAGE>
Attest: FBL INSTITUTIONAL SERIES FUND
By:
- ----------------------- -------------------------------
Its Assistant Secretary Its Vice President
<PAGE>
EXHIBIT A
FIDELITY BOND
JOINT INSUREDS AGREEMENT
For Bond Period September 26, 1995 through September 26, 1996.
<TABLE>
<CAPTION>
1. Basic Coverage
<S> <C>
Fund Basic Coverage
---- --------------
Series Fund 1,350,000
Money Fund 250,000
Insurance Series Fund 975,000
-------
TOTAL 2,575,000
</TABLE>
<TABLE>
<CAPTION>
2. Allocation of Premium
<S> <C> <C> <C>
Premium for Premium
Separate Allocation Bond
Fund Insured Bond Percentage Premium
---- ------------ ---------- -------
Series Fund 4,925.00 40.55% 3,999.61
Money Fund 2,786.00 22.94% 2,262.52
Ins. Series Fund 4,434.00 36.51% 3,600.87
-------- ------ --------
TOTAL 12,145.00 100.00% 9,863.00
</TABLE>
3. Allocation of Bond Proceeds
<TABLE>
<CAPTION>
<S> <C>
Fund Loss Percentage
---- ---------------
Series Fund 52.43%
Money Fund 9.71%
Ins. Series Fund 37.86%
---------------
TOTAL 100.00%
</TABLE>
<PAGE>
Attest: FBL SERIES FUND, INC.
By:
- ----------------------- -----------------------------
Its Assistant Secretary Its Vice President
Attest: FBL MONEY MARKET FUND, INC.
By:
- ----------------------- -----------------------------
Its Assistant Secretary Its Vice President
Attest: FBL VARIABLE INSURANCE SERIES FUND
By:
- ----------------------- -----------------------------
Its Assistant Secretary Its Vice President
<PAGE>
April 13, 1995 EXHIBIT A
to the
DO&EO Joint Insureds Agreement dated August 10, 1988
For Policy Period, 12:01 a.m., January 1, 1995, through 12:01 a.m., January 1,
1996.
<TABLE>
<CAPTION>
Party Premium %
- ----- ------- -----
<S> <C> <C>
FBL Investment Advisory Services, Inc. $23,354 70.34
FBL Marketing Services, Inc. 174 0.52
FBL Variable Insurance Series Fund 2,046 6.16
FBL Series Fund, Inc. 6,495 19.56
FBL Money Market Fund, Inc. 1,134 3.42
------- ------
$33,203 100.00
------- ------
</TABLE>
Attest: FBL INVESTMENT ADVISORY SERVICES, INC.
By: -
- --------------------------- ---------------------
Secretary: Dennis M. Marker Richard D. Warming
Attest: FBL MARKETING SERVICES, INC.
By:
- ---------------------------- -------------------
Secretary: Dennis M. Marker Timothy J. Hoffman
Attest: FBL VARIABLE INSURANCE FUND
By:
- --------------------------- ---------------------
Secretary: Eugene R. Maahs Merlin D. Plagge
Attest: FBL SERIES FUND, INC.
- --------------------------- By: --------------------
Secretary: Eugene R. Maahs Merlin D. Plagge
Attest: FBL MONEY MARKET FUND, INC.
By:
- --------------------------- ---------------------
Secretary: Eugene R. Maahs Merlin D. Plagge
<PAGE>
ACCOUNTING SERVICES AGREEMENT
BETWEEN
FBL INVESTMENT ADVISORY SERVICES, INC.
AND
FBL MONEY MARKET FUND, INC.
THIS AGREEMENT, entered into this 1st day of December, 1987, by and between
FBL Investment Advisory Services, Inc., a Delaware corporation, hereinafter
referred to as "FBL", and FBL Money Market Fund, Inc., a Maryland corporation,
hereinafter referred to as "Fund".
WITNESSETH:
WHEREAS, the Fund desires to obtain certain accounting and other services
from FBL; and
WHEREAS, FBL desires to provide such services for the Fund;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties agree as follows:
I. FBL agrees to:
A. Maintain all books, accounts, ledgers, journals, supporting
documents and supplementary records pertaining to the business of the Fund
which constitute the record forming the basis for financial statements
required of the Fund by law or required by resolution of the Fund Board of
Directors.
B. Calculate the net asset value of the Fund in accordance with the
Fund's current prospectus and communicate same to the Fund's transfer agent
on each day that the net asset value per share is calculated for the Fund.
C. Provide the personnel and facilities necessary to process payment
of all Fund expenditures, as authorized by the Fund.
D. Maintain all records of a financial nature pertaining to Fund
portfolio transactions as are required by law or resolution of the Fund
Board of Directors.
E. Prepare monthly financial statements, any statistical reports
requested by the Fund Board of Directors and supporting accounting work
papers.
<PAGE>
F. Provide the Fund Board of Directors the monthly financial
statements and statistical reports.
G. Prepare such other reports and analyses as requested by the Fund
Board of Directors to be presented at their quarterly meetings.
H. Prepare financial statements and any other related per share data
required for inclusion in the annual and semi-annual reports to
shareholders and amendments to the Fund's registration statement.
I. Prepare for timely filing all the Fund's required governmental
(state and federal) reports, tax returns and other filings, which FBL is
not otherwise required to prepare pursuant to the terms of other agreements
in effect between the Fund and FBL.
J. Prepare recommendations to the Fund Board of Directors regarding
the payment of income dividends and capital gains distributions.
K. Maintain or cause to be maintained all other books, accounts and
other documents that are required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 that are not required to be maintained for
the Fund pursuant to some other agreement between the Fund and FBL or
another party.
L. Preserve or cause to be preserved for the periods required in Rule
31a-2 under the Investment Company Act of 1940 all records covered by this
Agreement that are required to be maintained by Rule 31a-1.
II. The Fund agrees to:
Pay FBL an annual fee aggregating 0.05% of the average daily net
assets of the Fund, accrued daily and payable monthly, with such payments
not to exceed $30,000 per annum.
III. The parties hereto mutually agree:
A. That this Agreement shall become effective on the 1st day of
December 1987, shall remain in effect until November 30, 1988, and shall
continue in effect from year to year thereafter, unless sooner terminated
as hereinafter provided, so long as the continuance of the Agreement is
approved at least annually by a majority of the Directors who are not
parties to the Agreement or "interested persons" as that term is defined in
the Investment Company Act of 1940.
B. That either party may terminate this Agreement at any time by
giving 60 days' written notice of such termination to the other party.
<PAGE>
C. That any amendment to this Agreement must be in writing, executed
by both parties hereto.
D. That notices and other writings delivered or mailed postage
prepaid to the Fund or to FBL at 5400 University Avenue, West Des Moines,
Iowa 50265 shall be deemed to have been properly delivered or given
hereunder to the respective parties.
E. That this Agreement is executed and delivered in the State of Iowa
and is subject to and shall be construed according to the laws of that
State.
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed in its name and on its behalf and under its corporate seal by and
through its duly authorized officers on the day and year above stated.
ATTEST: FBL MONEY MARKET FUND, INC.
- -------------------------------- ------------------------------------
By: Its Assistant Secretary By: Its Vice President
ATTEST: FBL INVESTMENT ADVISORY SERVICES, INC.
- -------------------------------- --------------------------------------
By: Its Assistant Secretary By: Its Vice President
<PAGE>
DIVIDEND DISBURSING AND TRANSFER AGENT AGREEMENT
BETWEEN
FBL MONEY MARKET FUND, INC.
AND
PFS MANAGEMENT SERVICES, INC.
This Dividend Disbursing and Transfer Agent Agreement made this 23rd day of
February between FBL MONEY MARKET FUND, INC., a Maryland corporation
(hereinafter called the "Fund"), and PFS MANAGEMENT SERVICES, INC., a Delaware
corporation (hereinafter called the "Agent");
WITNESSETH:
WHEREAS, the Fund desires to enter into a Dividend Disbursing and Transfer
Agent Agreement with Agent under which Agent will provide the services as set
forth in detail in this Agreement, and Agent is desirous of providing such
services upon the terms and conditions hereinafter provided,
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed as follows:
1. The Agent shall perform all the usual and ordinary services of
stock transfer agent and dividend disbursing agent for the Fund, including
those hereinabove set forth. The Agent shall:
(a) keep the stock transfer books or records of the Fund and
addresses of all shareholders, the number and date of issuance of full
and fractional shares held by each, the number and date of
certificates for the shares and the number and date of cancellation of
each share and each certificate surrendered for cancellation;
(b) handle the issuance and redemption of Fund shares;
(c) effect and record shareholder transfers of ownership and
changes in forms of registration;
(d) cause all shareholder reports and proxies to be properly
addressed and mailed in connection with shareholders meetings;
(e) tabulate all proxies; and
(f) prepare and mail all required shareholder federal and state
and other income tax information forms.
<PAGE>
2. The Agent shall also act as the Fund's dividend agent in
allocating and causing ordinary dividends and capital gains distributions
to be disbursed to shareholders.
3. For its services specified above, the Fund shall pay to the Agent
fees as provided in Exhibit A which is attached hereto and made a part
hereof. Such fees shall be paid by the Fund monthly.
4. The Agent shall administer all periodic withdrawal plans relating
to Fund shares and receive such compensation therefor as may be provided
from time to time in the then current prospectus of the Fund.
5. The Agent agrees to act in good faith in furnishing the services
provided for herein. At the Agent's option it may furnish all necessary
facilities and personnel directly or it may retain a separate organization
for the purpose of performing all or any portion of the Agent's obligations
under this Agreement. The Agent assumes no responsibility under this
Agreement other than to render in good faith the services called for
hereunder.
6. The Agent agrees that in all matters relating to the services to
be performed by it hereunder, it will use its best efforts to act in
conformity with the terms of the Articles of Incorporation, By-Laws,
Registration Statement and current Prospectus of the Fund. Each of the
parties agrees that in all matters relating to the performance of the
Agreement, it will use its best efforts to conform to and comply with the
requirements of the federal Investment Company Act of 1940 and all other
applicable federal, state or other laws and regulations.
7. To the extent required by Section 31 of the Investment Company
Act of 1940 and the rules and regulations thereunder, Agent agrees that all
records maintained by it (or its sub-agent) relating to the services to be
performed by Agent under this Agreement are the property of the Fund and
will be preserved and surrendered promptly to the Fund on request.
8. The services of the Agent as provided herein are not to be deemed
to be exclusive, and it shall be free to render services of any kind to any
other group, firm, individual or association, including other investment
companies, and to engage in any other business or activity.
9. This Agreement, including Exhibit A hereto, may be amended at any
time by mutual written consent of the parties.
10. This Agreement shall be effective as of the date of execution,
and may be terminated by either party hereto upon sixty (60) days' written
notice given by one to the other, provided that no such notice of
termination given by the Agent to the Fund shall be effective unless and
until a substitute person or entity has been engaged by the Fund to perform
the services required hereunder for the Fund, or the Fund has certified to
the Agent that other arrangements have been made by it to provide such
services.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
FBL MONEY MARKET FUND, INC.
ATTEST: ---------------------------------------
- -----------------------------------
PFS MANAGEMENT SERVICES, INC.
ATTEST: ---------------------------------------
- -----------------------------------
<PAGE>
EXHIBIT A
TO
SHAREHOLDER SERVICE, DIVIDEND DISBURSING
AND TRANSFER AGENT AGREEEMENT
BETWEEN
FBL MONEY MARKET FUND, INC.
AND
FBL INVESTMENT ADVISORY SERVICES, INC.
SEPTEMBER 1, 1995
ANNUAL PER ACCOUNT MAINTENANCE FEE: $9.00
An annual minimum account maintenance fee of $12,000 applies to each fund/cusip.
ACTIVITY FEES:
Closed Account Fee 1.50
New Account Set Up 3.00
Transaction Fee 1.00
ACH Fee .25
Telephone Call 1.00
Letter Fee 1.50
Check Writing Fee .05
The annual account maintenance fee is payable monthly at the rate of 1/12 of the
annual fee per fund portfolio account. Activity fees will be paid monthly.
In addition, each Fund Portfolio will pay each month out-of-pocket expenses
incurred or advances made by FBL Investment Advisory Services, Inc. under the
Shareholder Service, Dividend Disbursing and Transfer Agent Agreement. These
items include, but are not limited to, postage, envelopes, checks, continuous
forms, reports and statements, telephone, telegraph, stationary, supplies, costs
of outside mailing firms, record storage and media for storage of records (e.g.,
microfilm, computer tapes).
Executed this 1st day of September , 1995.
------------- -------------------
FBL MONEY MARKET FUND, INC.
Attest:______________________________ _____________________________________
Its Assistant Secretary Its President
FBL INVESTMENT ADVISORY SERVICES, INC.
Attest:______________________________ _____________________________________
Its Secretary Its President
<PAGE>
[ERNST & YOUNG LLP LETTERHEAD]
Exhibit 11
Consent of Independent Auditors
The Board of Directors and Shareholders
FBL Money Market Fund, Inc.
We consent to the reference to our firm under the captions "Condensed Financial
Information" and "Independent Auditors" in Part A and "Other Information -
Independent Auditors" in Part B and to the incorporation by reference in this
Post Effective Amendment to Form N-1A Registration Statement under the
Securities Act of 1933 (No. 2-70162) and Registration Statement under the
Investment Company Act of 1940 (No. 811-3121) of FBL Money Market Fund, Inc. of
our report dated September 1, 1995, included in the July 31, 1995 Annual Report
of FBL Money Market Fund, Inc.
/s/ Ernst & Young LLP
Des Moines, Iowa
November 27, 1995
<PAGE>
FBL MONEY MARKET FUND, INC.
SUBSCRIPTION AGREEMENT
1. COMMON STOCK SUBSCRIPTION. The undersigned agrees to purchase
from FBL Money Market Fund, Inc. (the "Fund") 200,000 shares of FBL Money Market
Fund, Inc. common stock, $0.001 par value (the "Stock"), on the terms and
conditions set forth herein and in the Preliminary Prospectus described below
and hereby tenders $200,000 to purchase these shares at a price of $1.00 per
share.
The undersigned understands that the Fund filed a Registration Statement
with the Securities and Exchange Commission (No. 811-3121) on Form N-1, which
contains the Preliminary Prospectus which describes the Fund and the Stock. By
its signature hereto, the undersigned hereby acknowledges receipt of a copy of
the Preliminary Prospectus.
The undersigned recognizes that the Fund will not be fully operational
until such time as it commences the public offering of its shares. Accordingly,
a number of features of the Fund described in the Preliminary Prospectus,
including, without limitation, the declaration and payment of dividends and
redemption of shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until the Fund's
registration under the Securities Act of 1933 is made effective.
2. REPRESENTATION AND WARRANTIES. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no Federal or state agency has made any findings
or determination as to the fairness for investment, nor any recommendations or
endorsement, of the Stock;
(b) It has such knowledge and experience of financial and business
matters as will enable it to utilize the information made available to it in
connection with the offering of the Stock, to evaluate the merits and risks of
the Prospective investment and to make an informed investment decision;
(c) It recognizes that the Fund has only recently been organized and
has no financial or operating history and, further, that investment in the Fund
involves certain risks, and it has taken full cognizance of and understands all
of the risks related to the purchase of the Stock, and it acknowledges that it
has suitable financial resources and anticipated income to bear the economic
risk of such an investment;
(d) It is purchasing the Stock for its own account, for investment, and
not with any intention of redemption, distribution, or resale of the Stock,
either in whole or in part;
(e) It will not sell the Stock purchased by it without registration of
the Stock under the Securities Act
<PAGE>
of 1933 or exemption therefrom;
(f) It has been furnished with, and has carefully read, this Agreement
and the Preliminary Prospectus and such material documents relating to the Fund
as it has requested and as have been provided to it by the Fund; and
(g) It has also had the opportunity to ask questions of, and receive
answers from, the Fund concerning the Fund and the terms of the offering.
IN WITNESS WHEREOF, the undersigned has executed this instrument on
February 23 , 1981.
- -------------------------
PFS MANAGEMENT SERVICES, INC.
By:
------------------------------------------
Its : President
-----------------------------------
<PAGE>
Exhibit 14(a)(1)
_________________________________________
_________________________________________
QUALIFIED
RETIREMENT
PLAN
____________
BASIC PLAN
DOCUMENT
_________________________________________
_________________________________________
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
SECTION ONE DEFINITIONS
1.01 Adoption Agreement . . . . . . . . . . . . . . . . . . . . . 1
1.02 Basic Plan Document. . . . . . . . . . . . . . . . . . . . . 1
1.03 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 Break in Eligibility Service . . . . . . . . . . . . . . . . 1
1.05 Break in Vesting Service . . . . . . . . . . . . . . . . . . 1
1.06 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.07 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 1
1.08 Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 Disability . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Early Retirement Age . . . . . . . . . . . . . . . . . . . . 2
1.11 Earned Income. . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Effective Date . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Eligibility Computation Period . . . . . . . . . . . . . . . 2
1.14 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.16 Employer Contribution. . . . . . . . . . . . . . . . . . . . 3
1.17 Employment Commencement Date . . . . . . . . . . . . . . . . 3
1.18 Employer Profit Sharing Contribution . . . . . . . . . . . . 3
1.19 Entry Dates. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 Highly Compensated Employee. . . . . . . . . . . . . . . . . 3
1.24 Hours of Service - Means . . . . . . . . . . . . . . . . . . 3
1.25 Individual Account . . . . . . . . . . . . . . . . . . . . . 4
1.26 Investment Fund. . . . . . . . . . . . . . . . . . . . . . . 4
1.27 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . 4
1.28 Leased Employee. . . . . . . . . . . . . . . . . . . . . . . 4
1.29 Nondeductible Employee Contributions . . . . . . . . . . . . 4
1.30 Normal Retirement Age. . . . . . . . . . . . . . . . . . . . 4
1.31 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . . 4
1.32 Participant. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.33 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.34 Plan Administrator . . . . . . . . . . . . . . . . . . . . . 4
1.35 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.36 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37 Prototype Plan . . . . . . . . . . . . . . . . . . . . . . . 4
1.38 Qualifying Participant . . . . . . . . . . . . . . . . . . . 4
1.39 Related Employer . . . . . . . . . . . . . . . . . . . . . . 5
1.40 Related Employer Participation Agreement . . . . . . . . . . 5
1.41 Self-Employed Individual . . . . . . . . . . . . . . . . . . 5
1.42 Separate Fund. . . . . . . . . . . . . . . . . . . . . . . . 5
1.43 Taxable Wage Base. . . . . . . . . . . . . . . . . . . . . . 5
1.44 Termination of Employment. . . . . . . . . . . . . . . . . . 5
1.45 Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . 5
1.46 Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.47 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . 5
1.48 Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.49 Year of Eligibility Service. . . . . . . . . . . . . . . . . 5
1.50 Year of Vesting Service. . . . . . . . . . . . . . . . . . . 5
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 Eligibility To Participate . . . . . . . . . . . . . . . . . 6
2.02 Plan Entry . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Transfer To Or From Ineligible Class . . . . . . . . . . . . 6
2.04 Return As A Participant After Break In
Eligibility Service. . . . . . . . . . . . . . . . . . . . 6
2.05 Determinations Under This Section. . . . . . . . . . . . . . 6
2.06 Terms Of Employment. . . . . . . . . . . . . . . . . . . . . 6
2.07 Special Rules Where Elapsed Time Method Is Being Used. . . . 6
2.08 Election Not To Participate. . . . . . . . . . . . . . . . . 7
<PAGE>
SECTION THREE CONTRIBUTIONS
3.01 Employer Contributions . . . . . . . . . . . . . . . . . . . 7
3.02 Nondeductible Employee Contributions . . . . . . . . . . . . 9
3.03 Rollover Contributions . . . . . . . . . . . . . . . . . . . 9
3.04 Transfer Contributions . . . . . . . . . . . . . . . . . . . 9
3.05 Limitation On Allocations. . . . . . . . . . . . . . . . . . 9
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 Individual Accounts. . . . . . . . . . . . . . . . . . . . . 12
4.02 Valuation Of Fund. . . . . . . . . . . . . . . . . . . . . . 12
4.03 Valuation Of Individual Accounts . . . . . . . . . . . . . . 12
4.04 Modification Of Method For Valuing Individual Accounts . . . 12
4.05 Segregation Of Assets. . . . . . . . . . . . . . . . . . . . 12
4.06 Statement of Individual Accounts . . . . . . . . . . . . . . 12
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 Creation Of Fund . . . . . . . . . . . . . . . . . . . . . . 13
5.02 Investment Authority . . . . . . . . . . . . . . . . . . . . 13
5.03 Financial Organization Custodian Or Trustee Without
Full Trust Powers. . . . . . . . . . . . . . . . . . . . . 13
5.04 Financial Organization Trustee With Full Trust Powers
And Individual Trustee . . . . . . . . . . . . . . . . . . 13
5.05 Division Of Fund Into Investment Funds . . . . . . . . . . . 14
5.06 Compensation And Expenses. . . . . . . . . . . . . . . . . . 14
5.07 Not Obligated To Question Data . . . . . . . . . . . . . . . 14
5.08 Liability For Withholding On Distributions . . . . . . . . . 15
5.09 Resignation Or Removal Of Trustee (Or Custodian) . . . . . . 15
5.10 Degree Of Care - Limitations Of Liability. . . . . . . . . . 15
5.11 Indemnification Of Prototype Sponsor And Trustee
(Or Custodian) . . . . . . . . . . . . . . . . . . . . . . 15
5.12 Investment Managers. . . . . . . . . . . . . . . . . . . . . 15
5.13 Matters Relating To Insurance. . . . . . . . . . . . . . . . 16
5.14 Direction Of Investments By Participant. . . . . . . . . . . 16
SECTION SIX VESTING AND DISTRIBUTION
6.01 Distribution To Participant. . . . . . . . . . . . . . . . . 16
6.02 Form Of Distribution To A Participant. . . . . . . . . . . . 19
6.03 Distributions Upon The Death Of A Participant. . . . . . . . 19
6.04 Form Of Distribution To Beneficiary. . . . . . . . . . . . . 20
6.05 Joint And Survivor Annuity Requirements. . . . . . . . . . . 20
6.06 Distribution Requirements. . . . . . . . . . . . . . . . . . 22
6.07 Annuity Contracts. . . . . . . . . . . . . . . . . . . . . . 24
6.08 Loans To Participants. . . . . . . . . . . . . . . . . . . . 24
6.09 Distribution In Kind . . . . . . . . . . . . . . . . . . . . 25
6.10 Direct Rollovers Of Eligible Rollover Distributions. . . . . 25
6.11 Procedure For Missing Participants Or Beneficiaries. . . . . 26
SECTION SEVEN CLAIMS PROCEDURE
7.01 Filing A Claim For Plan Distributions. . . . . . . . . . . . 26
7.02 Denial Of Claim. . . . . . . . . . . . . . . . . . . . . . . 26
7.03 Remedies Available . . . . . . . . . . . . . . . . . . . . . 26
SECTION EIGHT PLAN ADMINISTRATOR
8.01 Employer Is Plan Administrator . . . . . . . . . . . . . . . 26
8.02 Powers And Duties Of The Plan Administrator. . . . . . . . . 26
8.03 Expenses And Compensation. . . . . . . . . . . . . . . . . . 27
8.04 Information From Employer. . . . . . . . . . . . . . . . . . 27
SECTION NINE AMENDMENT AND TERMINATION
9.01 Right Of Prototype Sponsor To Amend The Plan . . . . . . . . 27
9.02 Right Of Employer To Amend The Plan. . . . . . . . . . . . . 27
9.03 Limitation On Power To Amend . . . . . . . . . . . . . . . . 27
9.04 Amendment Of Vesting Schedule. . . . . . . . . . . . . . . . 28
<PAGE>
9.05 Permanency . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.06 Method And Procedure For Termination . . . . . . . . . . . . 28
9.07 Continuance Of Plan By Successor Employer. . . . . . . . . . 28
9.08 Failure Of Plan Qualification. . . . . . . . . . . . . . . . 28
SECTION TEN MISCELLANEOUS
10.01 State Community Property Laws. . . . . . . . . . . . . . . . 28
10.02 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.03 Gender And Number. . . . . . . . . . . . . . . . . . . . . . 28
10.04 Plan Merger Or Consolidation . . . . . . . . . . . . . . . . 28
10.05 Standard Of Fiduciary Conduct. . . . . . . . . . . . . . . . 28
10.06 General Undertaking Of All Parties . . . . . . . . . . . . . 29
10.07 Agreement Binds Heirs, Etc.. . . . . . . . . . . . . . . . . 29
10.08 Determination Of Top-Heavy Status. . . . . . . . . . . . . . 29
10.09 Special Limitations For Owner-Employees. . . . . . . . . . . 30
10.10 Inalienability Of Benefits . . . . . . . . . . . . . . . . . 30
10.11 Cannot Eliminate Protected Benefits. . . . . . . . . . . . . 30
SECTION ELEVEN 401(K) PROVISIONS
11.100 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 30
11.101 Actual Deferral Percentage (ADP) . . . . . . . . . . . . . . 30
11.102 Aggregate Limit. . . . . . . . . . . . . . . . . . . . . . . 31
11.103 Average Contribution Percentage (ACP). . . . . . . . . . . . 31
11.104 Contributing Participant . . . . . . . . . . . . . . . . . . 31
11.105 Contribution Percentage. . . . . . . . . . . . . . . . . . . 31
11.106 Contribution Percentage Amounts. . . . . . . . . . . . . . . 31
11.107 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . 31
11.108 Eligible Participant . . . . . . . . . . . . . . . . . . . . 31
11.109 Excess Aggregate Contributions . . . . . . . . . . . . . . . 31
11.110 Excess Contributions . . . . . . . . . . . . . . . . . . . . 31
11.111 Excess Elective Deferrals. . . . . . . . . . . . . . . . . . 31
11.112 Matching Contribution. . . . . . . . . . . . . . . . . . . . 32
11.113 Qualified Nonelective Contributions. . . . . . . . . . . . . 32
11.114 Qualified Matching Contributions . . . . . . . . . . . . . . 32
11.115 Qualifying Contributing Participant. . . . . . . . . . . . . 32
11.201 Requirements To Enroll As A Contributing Participant . . . . 32
11.202 Changing Elective Deferral Amounts . . . . . . . . . . . . . 32
11.203 Ceasing Elective Deferrals . . . . . . . . . . . . . . . . . 32
11.204 Return As A Contributing Participant After Ceasing
Elective Deferrals . . . . . . . . . . . . . . . . . . . . 32
11.205 Certain One-Time Irrevocable Elections . . . . . . . . . . . 32
11.300 Contributions. . . . . . . . . . . . . . . . . . . . . . . . 32
11.301 Contributions By Employer. . . . . . . . . . . . . . . . . . 32
11.302 Matching Contributions . . . . . . . . . . . . . . . . . . . 33
11.303 Qualified Nonelective Contributions. . . . . . . . . . . . . 33
11.304 Qualified Matching Contributions . . . . . . . . . . . . . . 33
11.305 Nondeductible Employee Contributions . . . . . . . . . . . . 33
11.400 Nondiscrimination Testing. . . . . . . . . . . . . . . . . . 33
11.401 Actual Deferral Percentage Test (ADP). . . . . . . . . . . . 33
11.402 Limits On Nondeductible Employee Contributions And
Matching Contributions . . . . . . . . . . . . . . . . . . 34
11.500 Distribution Provisions. . . . . . . . . . . . . . . . . . . 35
11.501 General Rule . . . . . . . . . . . . . . . . . . . . . . . . 35
11.502 Distribution Requirements. . . . . . . . . . . . . . . . . . 35
11.503 Hardship Distribution. . . . . . . . . . . . . . . . . . . . 35
11.504 Distribution Of Excess Elective Deferrals. . . . . . . . . . 35
11.505 Distribution Of Excess Contributions . . . . . . . . . . . . 36
11.506 Distribution Of Excess Aggregate Contributions . . . . . . . 36
11.507 Recharacterization . . . . . . . . . . . . . . . . . . . . . 36
11.508 Distribution Of Elective Deferrals If Excess Annual
Additions. . . . . . . . . . . . . . . . . . . . . . . . . 37
11.600 Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.601 100% Vesting On Certain Contributions. . . . . . . . . . . . 37
11.602 Forfeitures And Vesting Of Matching Contributions. . . . . . 37
<PAGE>
QUALIFIED RETIREMENT PLAN AND TRUST
Defined Contribution Basic Plan Document 04
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SECTION ONE DEFINITIONS
The following words and phrases when used in the Plan with
initial capital letters shall, for the purpose of this Plan, have
the meanings set forth below unless the context indicates that
other meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it
adopts the Plan and Trust and thereby agrees to be bound by all
terms and conditions of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BENEFICIARY
Means the individual or individuals designated pursuant to
Section 6.03(A) of the Plan.
1.04 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee fails to
complete more than 500 Hours of Service (or such lesser number of
Hours of Service specified in the Adoption Agreement for this
purpose).
1.05 BREAK IN VESTING SERVICE
Means a Plan Year (or other vesting computation period described
in Section 1.50) during which an Employee fails to complete more
than 500 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
1.06 CODE
Means the Internal Revenue Code of 1986 as amended from
time-to-time.
1.07 COMPENSATION
A. Basic Definition
For Plan Years beginning on or after January 1, 1989, the
following definition of Compensation shall apply:
As elected by the Employer in the Adoption Agreement (and if
no election is made, W-2 wages will be deemed to have been
selected), Compensation shall mean one of the following:
1. W-2 wages. Compensation is defined as information
required to be reported under Sections 6041 and 6051, and
6052 of the Code (Wages, tips and other compensation as
reported on Form W-2). Compensation is defined as wages
within the meaning of Section 3401(a) of the Code and all
other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade or
business) for which the Employer is required to furnish
the Employee a written statement under Sections 6041(d)
and 6051(a)(3), and 6052 of the Code. Compensation must
be determined without regard to any rules under Section
3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the
services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
2. Section 3401(a) wages. Compensation is defined as wages
within the meaning of Section 3401(a) of the Code, for
the purposes of income tax withholding at the source but
determined without regard to any rules that limit the
remuneration included in wages based on the nature or
location of the employment or the services performed
(such as the exception for agricultural labor in Section
3401(a)(2)).
3. 415 safe-harbor compensation. Compensation is defined as
wages, salaries, and fees for professional services and
other amounts received (without regard to whether or not
an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are
includible in gross income (including, but not limited
to, commissions paid salesmen, compensation for services
on the basis of a percentage of profits, commissions on
insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a
nonaccountable plan (as described in 1.62-2(c)), and
excluding the following:
a. Employer contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year in which
contributed, or employer contributions under a
simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
b. Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
c. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
d. Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity contract described in Section
403(b) of the Code (whether or not the contributions
are actually excludable from the gross income of the
Employee).
For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.
B. DETERMINATION PERIOD AND OTHER RULES
Compensation shall include only that Compensation which is
actually paid to the Participant during the determination
period. Except as provided elsewhere in this Plan, the
determination period shall be the Plan Year unless the
Employer has selected another period in the Adoption
Agreement. If the Employer makes no election, the
determination period shall be the Plan Year.
Unless otherwise indicated in the Adoption Agreement,
Compensation shall include any amount which is contributed by
the Employer pursuant to a salary reduction agreement and
which is not includible in the gross income of the Employee
under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the
Code.
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2
Where this Plan is being adopted as an amendment and
restatement to bring a Prior Plan into compliance with the
Tax Reform Act of 1986, such Prior Plan's definition of
Compensation shall apply for Plan Years beginning before
January 1, 1989.
C. LIMITS ON COMPENSATION
For years beginning after December 31, 1988 and before
January 1, 1994, the annual Compensation of each Participant
taken into account for determining all benefits provided
under the Plan for any determination period shall not exceed
$200,000. This limitation shall be adjusted by the
Secretary at the same time and in the same manner as under
Section 415(d) of the Code, except that the dollar increase
in effect on January 1 of any calendar year is effective for
Plan Years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effective on January
1, 1990.
For Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Participant taken into account
for determining all benefits provided under the Plan for any
Plan Year shall not exceed $150,000, as adjusted for
increases in the cost-of-living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-
living adjustment in effect for a calendar year applies to
any determination period beginning in such calendar year.
If the period for determining Compensation used in
calculating an Employee's allocation for a determination
period is a short Plan Year (i.e., shorter than 12 months),
the annual Compensation limit is an amount equal to the
otherwise applicable annual Compensation limit multiplied by
a fraction, the numerator of which is the number of months in
the short Plan Year, and the denominator of which is 12.
In determining the Compensation of a Participant for purposes
of this limitation, the rules of Section 414(q)(6) of the
Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Participant and
any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If, as a
result of the application of such rules the adjusted $200,000
limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration
level, if this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals
in proportion to each such individual's Compensation as
determined under this Section prior to the application of
this limitation.
If Compensation for any prior determination period is taken
into account in determining an Employee's allocations or
benefits for the current determination period, the
Compensation for such prior determination period is subject
to the applicable annual Compensation limit in effect for
that prior period. For this purpose, in determining
allocations in Plan Years beginning on or after January 1,
1989, the annual Compensation limit in effect for
determination periods beginning before that date is $200,000.
In addition, in determining allocations in Plan Years
beginning on or after January 1, 1994, the annual
Compensation limit in effect for determination periods
beginning before that date is $150,000.
1.08 CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian
or any duly appointed successor as provided in Section 5.09.
1.09 DISABILITY
Unless the Employer has elected a different definition in the
Adoption Agreement, Disability means the inability to engage in
any substantial, gainful activity by reason of any medically
determinable physical or mental impairment that can be expected
to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months. The
permanence and degree of such impairment shall be supported by
medical evidence.
1.10 EARLY RETIREMENT AGE
Means the age specified in the Adoption Agreement. The Plan will
not have an Early Retirement Age if none is specified in the
Adoption Agreement.
1.11 EARNED INCOME
Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which
personal services of the individual are a material income-
producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions
allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified plan to the extent
deductible under Section 404 of the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable
years beginning after December 31, 1989.
1.12 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the
Adoption Agreement. However, as indicated in the Adoption
Agreement, certain provisions may have specific effective dates.
Further, where a separate date is stated in the Plan as of which
a particular Plan provision becomes effective, such date will
control with respect to that provision.
1.13 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the
12 consecutive month period commencing on the Employee's
Employment Commencement Date. The Employee's subsequent
Eligibility Computation Periods shall be the 12 consecutive month
periods commencing on the anniversaries of his or her Employment
Commencement Date; provided, however, if pursuant to the Adoption
Agreement, an Employee is required to complete one or less Years
of Eligibility Service to become a Participant, then his or her
subsequent Eligibility Computation Periods shall be the Plan
Years commencing with the Plan Year beginning during his or her
initial Eligibility Computation Period. An Employee does not
complete a Year of Eligibility Service before the end of the 12
consecutive month period regardless of when during such period
the Employee completes the required number of Hours of Service.
1.14 EMPLOYEE
Means any person employed by an Employer maintaining the Plan or
of any other employer required to be aggregated with such
Employer under Sections 414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any Leased Employee deemed
to be an Employee of any Employer described in the previous
paragraph as provided in Section 414(n) or (o) of the Code.
1.15 EMPLOYER
Means any corporation, partnership, sole-proprietorship or other
entity named in the Adoption Agreement and any successor who by
merger, consolidation, purchase or otherwise assumes the
obligations of the Plan. A partnership is considered to be the
Employer of each of the partners and a sole-proprietorship is
considered to be the Employer of a sole proprietor. Where this
Plan is being maintained by a union or other entity that
represents its member Employees in the negotiation of collective
bargaining agreements, the term Employer shall mean such union or
other entity.
<PAGE>
3
1.16 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as
determined under this Plan.
1.17 EMPLOYMENT COMMENCEMENT DATE
An Employee's Employment Commencement date means the date the
Employee first performs an Hour of Service for the Employer.
1.18 EMPLOYER PROFIT SHARING CONTRIBUTION
Means an Employer Contribution made pursuant to the Section of
the Adoption Agreement titled "Employer Profit Sharing
Contributions." The Employer may make Employer Profit Sharing
Contributions without regard to current or accumulated earnings
or profits.
1.19 ENTRY DATES
Means the first day of the Plan Year and the first day of the
seventh month of the Plan Year, unless the Employer has specified
different dates in the Adoption Agreement.
1.20 ERISA
Means the Employee Retirement Income Security Act of 1974 as
amended from time-to-time.
1.21 FORFEITURE
Means that portion of a Participant's Individual Account derived
from Employer Contributions which he or she is not entitled to
receive (i.e., the nonvested portion).
1.22 FUND
Means the Plan assets held by the Trustee for the Participants'
exclusive benefit.
1.23 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated
active employees and highly compensated former employees.
A highly compensated active employee includes any Employee who
performs service for the Employer during the determination year
and who, during the look-back year: (a) received Compensation
from the Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (b) received Compensation from the
Employer in excess of $50,000 (as adjusted pursuant to Section
415(d) of the Code) and was a member of the top-paid group for
such year; or (c) was an officer of the Employer and received
Compensation during such year that is greater than 50% of the
dollar limitation in effect under Section 415(b)(1)(A) of the
Code. The term Highly Compensated Employee also includes: (a)
Employees who are both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back
year" and the Employee is one of the 100 Employees who received
the most Compensation from the Employer during the determination
year; and (b) Employees who are 5% owners at any time during the
look-back year or determination year.
If no officer has satisfied the Compensation requirement of (c)
above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
For this purpose, the determination year shall be the Plan Year.
The look-back year shall be the 12 month period immediately
preceding the determination year.
A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to
the determination year, performs no service for the Employer
during the determination year, and was a highly compensated
active employee for either the separation year or any
determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back year,
a family member of either a 5% owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10
most Highly Compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the
family member and the 5% owner or top 10 Highly Compensated
Employee shall be aggregated. In such case, the family member
and 5% owner or top 10 Highly Compensated Employee shall be
treated as a single Employee receiving Compensation and Plan
contributions or benefits equal to the sum of such Compensation
and contributions or benefits of the family member and 5% owner
or top 10 Highly Compensated Employee. For purposes of this
Section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of
such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the Compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations thereunder.
1.24 HOURS OF SERVICE - Means
A. Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
These hours will be credited to the Employee for the
computation period in which the duties are performed; and
B. Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether
the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than
501 Hours of Service will be credited under this paragraph
for any single continuous period (whether or not such period
occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations
which is incorporated herein by this reference; and
C. Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under
paragraph (A) or paragraph (B), as the case may be, and under
this paragraph (C). These hours will be credited to the
Employee for the computation period or periods to which the
award or agreement pertains rather than the computation
period in which the award, agreement, or payment is made.
D. Solely for purposes of determining whether a Break in
Eligibility Service or a Break in Vesting Service has
occurred in a computation period (the computation period for
purposes of determining whether a Break in Vesting Service
has occurred is the Plan Year or other vesting computation
period described in Section 1.50), an individual who is
absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise
have been credited to such individual but for such absence,
or in any case in which such hours cannot be determined, 8
Hours of Service per day of such absence. For purposes of
this paragraph, an absence from work for maternity or
paternity reasons means an
<PAGE>
4
absence (1) by reason of the pregnancy of the individual, (2)
by reason of a birth of a child of the individual, (3) by
reason of the placement of a child with the individual in
connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for
a period beginning immediately following such birth or
placement. The Hours of Service credited under this
paragraph shall be credited (1) in the Eligibility
Computation Period or Plan Year or other vesting computation
period described in Section 1.50 in which the absence begins
if the crediting is necessary to prevent a Break in
Eligibility Service or a Break in Vesting Service in the
applicable period, or (2) in all other cases, in the
following Eligibility Computation Period or Plan Year or
other vesting computation period described in Section 1.50.
E. Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m)
of the Code), a controlled group of corporations (under
Section 414(b) of the Code), or a group of trades or
businesses under common control (under Section 414(c) of the
Code) of which the adopting Employer is a member, and any
other entity required to be aggregated with the Employer
pursuant to Section 414(o) of the Code and the regulations
thereunder.
Hours of Service will also be credited for any individual
considered an Employee for purposes of this Plan under Code
Sections 414(n) or 414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be
treated as service for the Employer.
G. The above method for determining Hours of Service may be
altered as specified in the Adoption Agreement.
1.25 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for
each Participant in accordance with Section 4.01.
1.26 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section
5.05.
1.27 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under
Section 10.08.
1.28 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially
full time basis for a period of at least one year, and such
services are of a type historically performed by Employees in the
business field of the recipient Employer. Contributions or
benefits provided a Leased Employee by the leasing organization
which are attributable to services performed for the recipient
Employer shall be treated as provided by the recipient Employer.
A Leased Employee shall not be considered an Employee of the
recipient if: (1) such employee is covered by a money purchase
pension plan providing: (a) a nonintegrated employer contribution
rate of at least 10% of compensation, as defined in Section
415(c)(3) of the Code, but including amounts contributed pursuant
to a salary reduction agreement which are excludable from the
employee's gross income under Section 125, Section 402(e)(3),
Section 402(h)(1)(B) or Section 403(b) of the Code, (b) immediate
participation, and (c) full and immediate vesting; and (2) Leased
Employees do not constitute more than 20% of the recipient's
nonhighly compensated work force.
1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Means any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate
account to which earnings and losses are allocated.
1.30 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if
the Employer enforces a mandatory retirement age which is less
than the Normal Retirement Age, such mandatory age is deemed to
be the Normal Retirement Age. If no age is specified in the
Adoption Agreement, the Normal Retirement Age shall be age 65.
1.31 OWNER - EMPLOYEE
Means an individual who is a sole proprietor, or who is a partner
owning more than 10% of either the capital or profits interest of
the partnership.
1.32 PARTICIPANT
Means any Employee or former Employee of the Employer who has met
the Plan's eligibility requirements, has entered the Plan and who
is or may become eligible to receive a benefit of any type from
this Plan or whose Beneficiary may be eligible to receive any
such benefit.
1.33 PLAN
Means the prototype defined contribution plan adopted by the
Employer. The Plan consists of this Basic Plan Document plus the
corresponding Adoption Agreement as completed and signed by the
Employer.
1.34 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan
Administrator in accordance with Section 8.01.
1.35 PLAN YEAR
Means the 12 consecutive month period which coincides with the
Employer's fiscal year or such other 12 consecutive month period
as is designated in the Adoption Agreement.
1.36 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this
Plan document as indicated in the Adoption Agreement.
1.37 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement that makes
this prototype plan available to employers for adoption.
1.38 QUALIFYING PARTICIPANT
Means a Participant who has satisfied the requirements described
in Section 3.01(B)(2) to be entitled to share in any Employer
Contribution (and Forfeitures, if applicable) for a Plan Year.
<PAGE>
5
1.39 RELATED EMPLOYER
Means an employer that may be required to be aggregated with the
Employer adopting this Plan for certain qualification
requirements under Sections 414(b), (c), (m) or (o) of the Code
(or any other employer that has ownership in common with the
Employer). A Related Employer may participate in this Plan if so
indicated in the Section of the Adoption Agreement titled
"Employer Information" or if such Related Employer executes a
Related Employer Participation Agreement.
1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT
Means the agreement under this prototype Plan that a Related
Employer may execute to participate in this Plan.
1.41 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable year
from the trade or business for which the Plan is established;
also, an individual who would have had Earned Income but for the
fact that the trade or business had no net profits for the
taxable year.
1.42 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that
Participant. The assets which comprise a Participant's Separate
Fund are those assets earmarked for him or her and those assets
subject to the Participant's individual direction pursuant to
Section 5.14.
1.43 TAXABLE WAGE BASE
Means, with respect to any taxable year, the contribution and
benefit base in effect under Section 230 of the Social Security
Act at the beginning of the Plan Year.
1.44 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall
occur whenever his or her status as an Employee of such Employer
ceases for any reason other than death. An Employee who does not
return to work for the Employer on or before the expiration of an
authorized leave of absence from such Employer shall be deemed to
have incurred a Termination of Employment when such leave ends.
1.45 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is
determined to be such pursuant to Section 10.08.
1.46 TRUSTEE
Means an individual, individuals or corporation specified in the
Adoption Agreement as Trustee or any duly appointed successor as
provided in Section 5.09. Trustee shall mean Custodian in the
event the financial organization named as Trustee does not have
full trust powers.
1.47 VALUATION DATE
Means the date or dates as specified in the Adoption Agreement.
If no date is specified in the Adoption Agreement, the Valuation
Date shall be the last day of the Plan Year and each other date
designated by the Plan Administrator which is selected in a
uniform and nondiscriminatory manner when the assets of the Fund
are valued at their then fair market value.
1.48 VESTED
Means nonforfeitable, that is, a claim which is unconditional and
legally enforceable against the Plan obtained by a Participant or
the Participant's Beneficiary to that part of an immediate or
deferred benefit under the Plan which arises from a Participant's
Years of Vesting Service.
1.49 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee completes
at least 1,000 Hours of Service (or such lesser number of Hours
of Service specified in the Adoption Agreement for this purpose).
An Employee does not complete a Year of Eligibility Service
before the end of the 12 consecutive month period regardless of
when during such period the Employee completes the required
number of Hours of Service.
1.50 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least
1,000 Hours of Service (or such lesser number of Hours of Service
specified in the Adoption Agreement for this purpose).
Notwithstanding the preceding sentence, where the Employer so
indicates in the Adoption Agreement, vesting shall be computed by
reference to the 12 consecutive month period beginning with the
Employee's Employment Commencement Date and each successive 12
month period commencing on the anniversaries thereof.
In the case of a Participant who has 5 or more consecutive Breaks
in Vesting Service, all Years of Vesting Service after such
Breaks in Vesting Service will be disregarded for the purpose of
determining the Vested portion of his or her Individual Account
derived from Employer Contributions that accrued before such
breaks. Such Participant's prebreak service will count in
vesting the postbreak Individual Account derived from Employer
Contributions only if either:
(A) such Participant had any Vested right to any portion of his
or her Individual Account derived from Employer Contributions
at the time of his or her Termination of Employment; or
(B) upon returning to service, the number of consecutive Breaks
in Vesting Service is less than his or her number of Years of
Vesting Service before such breaks.
Separate subaccounts will be maintained for the Participant's
prebreak and postbreak portions of his or her Individual Account
derived from Employer Contributions. Both subaccounts will share
in the gains and losses of the Fund.
Years of Vesting Service shall not include any period of time
excluded from Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period,
Employees shall receive credit for Years of Vesting Service, in
accordance with the preceding provisions of this definition, for
each of the Plan Years (the old and new Plan Years) which overlap
as a result of such change.
<PAGE>
6
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong
to a class of Employees which is excluded from participation as
indicated in the Adoption Agreement, shall be eligible to
participate in this Plan upon the satisfaction of the age and
Years of Eligibility Service requirements specified in the
Adoption Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a
Participant in said Prior Plan before the Effective Date
shall continue to be a Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the
Effective Date if the Employee has met the eligibility
requirements of Section 2.01 as of such date. After the
Effective Date, each Employee shall become a Participant on
the first Entry Date following the date the Employee
satisfies the eligibility requirements of Section 2.01 unless
otherwise indicated in the Adoption Agreement.
C. The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall
furnish the Employee with the application form, enrollment
forms or other documents which are required of Participants.
The eligible Employee shall execute such forms or documents
and make available such information as may be required in the
administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to
participate because he or she is no longer a member of an
eligible class of Employees, but has not incurred a Break in
Eligibility Service, such Employee shall participate immediately
upon his or her return to an eligible class of Employees. If
such Employee incurs a Break in Eligibility Service, his or her
eligibility to participate shall be determined by Section 2.04.
An Employee who is not a member of the eligible class of
Employees will become a Participant immediately upon becoming a
member of the eligible class provided such Employee has satisfied
the age and Years of Eligibility Service requirements. If such
Employee has not satisfied the age and Years of Eligibility
Service requirements as of the date he or she becomes a member of
the eligible class, such Employee shall become a Participant on
the first Entry Date following the date he or she satisfies those
requirements unless otherwise indicated in the Adoption
Agreement.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. EMPLOYEE NOT PARTICIPANT BEFORE BREAK - If an Employee incurs
a Break in Eligibility Service before satisfying the Plan's
eligibility requirements, such Employee's Years of
Eligibility Service before such Break in Eligibility Service
will not be taken into account.
B. NONVESTED PARTICIPANTS - In the case of a Participant who
does not have a Vested interest in his or her Individual
Account derived from Employer Contributions, Years of
Eligibility Service before a period of consecutive Breaks in
Eligibility Service will not be taken into account for
eligibility purposes if the number of consecutive Breaks in
Eligibility Service in such period equals or exceeds the
greater of 5 or the aggregate number of Years of Eligibility
Service before such break. Such aggregate number of Years of
Eligibility Service will not include any Years of Eligibility
Service disregarded under the preceding sentence by reason of
prior breaks.
If a Participant's Years of Eligibility Service are
disregarded pursuant to the preceding paragraph, such
Participant will be treated as a new Employee for eligibility
purposes. If a Participant's Years of Eligibility Service
may not be disregarded pursuant to the preceding paragraph,
such Participant shall continue to participate in the Plan,
or, if terminated, shall participate immediately upon
reemployment.
C. VESTED PARTICIPANTS - A Participant who has sustained a
Break in Eligibility Service and who had a Vested interest in
all or a portion of his or her Individual Account derived
from Employer Contributions shall continue to participate in
the Plan, or, if terminated, shall participate immediately
upon reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each
Employee to be a Participant. This determination shall be
conclusive and binding upon all persons except as otherwise
provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact
that a common law Employee has become a Participant shall give to
that common law Employee any right to continued employment; nor
shall either fact limit the right of the Employer to discharge or
to deal otherwise with a common law Employee without regard to
the effect such treatment may have upon the Employee's rights
under the Plan.
2.07 SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED
This Section 2.07 shall apply where the Employer has indicated in
the Adoption Agreement that the elapsed time method will be used.
When this Section applies, the definitions of year of service,
break in service and hour of service in this Section will replace
the definitions of Year of Eligibility Service, Year of Vesting
Service, Break in Eligibility Service, Break in Vesting Service
and Hours of Service found in the Definitions Section of the Plan
(Section One).
For purposes of determining an Employee's initial or continued
eligibility to participate in the Plan or the Vested interest in
the Participant's Individual Account balance derived from
Employer Contributions, (except for periods of service which may
be disregarded on account of the "rule of parity" described in
Sections 1.50 and 2.04) an Employee will receive credit for the
aggregate of all time period(s) commencing with the Employee's
first day of employment or reemployment and ending on the date a
break in service begins. The first day of employment or
reemployment is the first day the Employee performs an hour of
service. An Employee will also receive credit for any period of
severance of less than 12 consecutive months. Fractional periods
of a year will be expressed in terms of days.
For purposes of this Section, hour of service will mean each hour
for which an Employee is paid or entitled to payment for the
performance of duties for the Employer. Break in service is a
period of severance of at least 12 consecutive months. Period of
severance is a continuous period of time during which the
Employee is not employed by the Employer. Such period begins on
the date the Employee retires, quits or is discharged, or if
earlier, the 12 month anniversary of the date on which the
Employee was otherwise first absent from service.
In the case of an individual who is absent from work for
maternity or paternity reasons, the 12 consecutive month period
beginning on the first anniversary of the first date of such
absence shall not constitute a break in service. For purposes of
this
<PAGE>
7
paragraph, an absence from work for maternity or paternity
reasons means an absence (1) by reason of the pregnancy of the
individual, (2) by reason of the birth of a child of the
individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
Each Employee will share in Employer Contributions for the period
beginning on the date the Employee commences participation under
the Plan and ending on the date on which such Employee severs
employment with the Employer or is no longer a member of an
eligible class of Employees.
If the Employer is a member of an affiliated service group (under
Section 414(m) of the Code), a controlled group of corporations
(under Section 414(b) of the Code), a group of trades or
businesses under common control (under Section 414(c) of the
Code), or any other entity required to be aggregated with the
Employer pursuant to Section 414(o) of the Code, service will be
credited for any employment for any period of time for any other
member of such group. Service will also be credited for any
individual required under Section 414(n) or Section 414(o) to be
considered an Employee of any Employer aggregated under Section
414(b), (c), or (m) of the Code.
2.08 ELECTION NOT TO PARTICIPATE
This Section 2.08 will apply if this Plan is a nonstandardized
plan and the Adoption Agreement so provides. If this Section
applies, then an Employee or a Participant may elect not to
participate in the Plan for one or more Plan Years. The Employer
may not contribute for an Employee or Participant for any Plan
Year during which such Employee's or Participant's election not
to participate is in effect. Any election not to participate
must be in writing and filed with the Plan Administrator.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules as it deems necessary or advisable to
carry out the terms of this Section, including, but not limited
to, rules prescribing the timing of the filing of elections not
to participate and the procedures for electing to re-participate
in the Plan.
An Employee or Participant continues to earn credit for vesting
and eligibility purposes for each Year of Vesting Service or Year
of Eligibility Service he or she completes and his or her
Individual Account (if any) will share in the gains or losses of
the Fund during the periods he or she elects not to participate.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. OBLIGATION TO CONTRIBUTE - The Employer shall make
contributions to the Plan in accordance with the contribution
formula specified in the Adoption Agreement. If this Plan is
a profit sharing plan, the Employer shall, in its sole
discretion, make contributions without regard to current or
accumulated earnings or profits.
B. ALLOCATION FORMULA AND THE RIGHT TO SHARE IN THE EMPLOYER
CONTRIBUTION -
1. General - The Employer Contribution for any Plan Year
will be allocated or contributed to the Individual
Accounts of Qualifying Participants in accordance with
the allocation or contribution formula specified in the
Adoption Agreement. The Employer Contribution for any
Plan Year will be allocated to each Participant's
Individual Account as of the last day of that Plan Year.
Any Employer Contribution for a Plan Year must satisfy
Section 401(a)(4) and the regulations thereunder for such
Plan Year.
2. Qualifying Participants - A Participant is a Qualifying
Participant and is entitled to share in the Employer
Contribution for any Plan Year if the Participant was a
Participant on at least one day during the Plan Year and
satisfies any additional conditions specified in the
Adoption Agreement. If this Plan is a standardized plan,
unless the Employer specifies more favorable conditions
in the Adoption Agreement, a Participant will not be a
qualifying Participant for a Plan Year if he or she
incurs a Termination of Employment during such Plan Year
with not more than 500 Hours of Service if he or she is
not an Employee on the last day of the Plan Year. The
determination of whether a Participant is entitled to
share in the Employer Contribution shall be made as of
the last day of each Plan Year.
3. Special Rules for Integrated Plans - This Plan may not
allocate contributions based on an integrated formula if
the Employer maintains any other plan that provides for
allocation of contributions based on an integrated
formula that benefits any of the same Participants. If
the Employer has selected the integrated contribution or
allocation formula in the Adoption Agreement, then the
maximum disparity rate shall be determined in accordance
with the following table.
MAXIMUM DISPARITY RATE
<TABLE>
<CAPTION>
Top-Heavy Nonstandardized and
Integration Level Money Purchase Profit Sharing Non-Top-Heavy Profit Sharing
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more
than 20% of TWB 5.7% 2.7% 5.7%
More than 20% of TWB but
not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but
not more than TWB 5.4% 2.4% 5.4%
</TABLE>
<PAGE>
8
C. ALLOCATION OF FORFEITURES - Forfeitures for a Plan Year which
arise as a result of the application of Section 6.01(D) shall
be allocated as follows:
1. Profit Sharing Plan - If this is a profit sharing plan,
unless the Adoption Agreement indicates otherwise,
Forfeitures shall be allocated in the manner provided in
Section 3.01(B) (for Employer Contributions) to the
Individual Accounts of Qualifying Participants who are
entitled to share in the Employer Contribution for such
Plan Year. Forfeitures shall be allocated as of the last
day of the Plan Year during which the Forfeiture arose
(or any subsequent Plan Year if indicated in the Adoption
Agreement).
2. Money Purchase Pension and Target Benefit Plan - If this
Plan is a money purchase plan or a target benefit plan,
unless the Adoption Agreement indicates otherwise,
Forfeitures shall be applied towards the reduction of
Employer Contributions to the Plan. Forfeitures shall
be allocated as of the last day of the Plan Year during
which the Forfeiture arose (or any subsequent Plan Year
if indicated in the Adoption Agreement).
D. TIMING OF EMPLOYER CONTRIBUTION - The Employer Contribution
for each Plan Year shall be delivered to the Trustee (or
Custodian, if applicable) not later than the due date for
filing the Employer's income tax return for its fiscal year
in which the Plan Year ends, including extensions thereof.
E. MINIMUM ALLOCATION FOR TOP-HEAVY PLANS - The contribution and
allocation provisions of this Section 3.01(E) shall apply for
any Plan Year with respect to which this Plan is a Top-Heavy
Plan.
1. Except as otherwise provided in (3) and (4) below, the
Employer Contributions and Forfeitures allocated on
behalf of any Participant who is not a Key Employee shall
not be less than the lesser of 3% of such Participant's
Compensation or (in the case where the Employer has no
defined benefit plan which designates this Plan to
satisfy Section 401 of the Code) the largest percentage
of Employer Contributions and Forfeitures, as a
percentage of the first $200,000 ($150,000 for Plan Years
beginning after December 31, 1993), (increased by any
cost of living adjustment made by the Secretary of
Treasury or the Secretary's delegate) of the Key
Employee's Compensation, allocated on behalf of any Key
Employee for that year. The minimum allocation is
determined without regard to any Social Security
contribution. The Employer may, in the Adoption
Agreement, limit the Participants who are entitled to
receive the minimum allocation. This minimum allocation
shall be made even though under other Plan provisions,
the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser
allocation for the year because of (a) the Participant's
failure to complete 1,000 Hours of Service (or any
equivalent provided in the Plan), or (b) the
Participant's failure to make mandatory Nondeductible
Employee Contributions to the Plan, or (c) Compensation
less than a stated amount.
2. For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in
Section 1.07 of the Plan and shall include any amounts
contributed by the Employer pursuant to a salary
reduction agreement and which is not includible in the
gross income of the Employee under Sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code even if the
Employer has elected to exclude such contributions in the
definition of Compensation used for other purposes under
the Plan.
3. The provision in (1) above shall not apply to any
Participant who was not employed by the Employer on the
last day of the Plan Year.
4. The provision in (1) above shall not apply to any
Participant to the extent the Participant is covered
under any other plan or plans of the Employer and the
Employer has provided in the adoption agreement that the
minimum allocation or benefit requirement applicable to
Top-Heavy Plans will be met in the other plan or plans.
5. The minimum allocation required under this Section
3.01(E) and Section 3.01(F)(1) (to the extent required to
be nonforfeitable under Code Section 416(b)) may not be
forfeited under Code Section 411(a)(3)(B) or
411(a)(3)(D).
F. SPECIAL REQUIREMENTS FOR PAIRED PLANS - The Employer
maintains paired plans if the Employer has adopted both a
standardized profit sharing plan and a standardized money
purchase pension plan using this Basic Plan Document.
1. Minimum Allocation - When the paired plans are top-heavy,
the top-heavy requirements set forth in Section
3.01(E)(1) of the Plan shall apply.
a. Same eligibility requirements. In satisfying the
top-heavy minimum allocation requirements set forth
in Section 3.01(E) of the Plan, if the Employees
benefiting under each of the paired plans are
identical, the top-heavy minimum allocation shall be
made to the money purchase pension plan.
b. Different eligibility requirements. In satisfying
the top-heavy minimum allocation requirements set
forth in Section 3.01(E) of the Plan, if the
Employees benefiting under each of the paired plans
are not identical, the top-heavy minimum allocation
will be made to both of the paired plans.
A Participant is treated as benefiting under the Plan for
any Plan Year during which the Participant received or is
deemed to receive an allocation in accordance with
Section 1.410(b)-3(a).
2. Only One Plan Can Be Integrated - If the Employer
maintains paired plans, only one of the Plans may provide
for the disparity in contributions which is permitted
under Section 401(l) of the Code. In the event that both
Adoption Agreements provide for such integration, only
the money purchase pension plan shall be deemed to be
integrated.
G. RETURN OF THE EMPLOYER CONTRIBUTION TO THE EMPLOYER UNDER
SPECIAL CIRCUMSTANCES - Any contribution made by the Employer
because of a mistake of fact must be returned to the Employer
within one year of the contribution.
In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Code, any contributions made incident to that initial
qualification by the Employer must be returned to the
Employer within one year after the date the initial
qualification is denied, but only if the application for
qualification is made by the time prescribed by law for
filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date as the Secretary of
the Treasury may prescribe.
In the event that a contribution made by the Employer under
this Plan is conditioned on deductibility and is not
deductible under Code Section 404, the contribution, to the
extent of the amount disallowed, must be returned to the
Employer within one year after the deduction is disallowed.
H. Omission of Participant
1. If the Plan is a money purchase plan or a target benefit
plan and, if in any Plan Year, any Employee who should be
included as a Participant is erroneously omitted and
discovery of such omission is not made until after a
contribution by the Employer for the year has been made
and allocated, the Employer shall make a subsequent
contribution to
<PAGE>
9
include earnings thereon, with respect to the omitted
Employee in the amount which the Employer would have
contributed with respect to that Employee had he or she
not been omitted.
2. If the Plan is a profit sharing plan, and if in any Plan
Year, any Employee who should be included as a
Participant is erroneously omitted and discovery of such
omission is not made until after the Employer
Contribution has been made and allocated, then the Plan
Administrator must re-do the allocation (if a correction
can be made) and inform the Employee. Alternatively, the
Employer may choose to contribute for the omitted
Employee the amount to include earnings thereon, which
the Employer would have contributed for the Employee.
3.02 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
This Plan will not accept Nondeductible Employee Contributions
and matching contributions for Plan Years beginning after the
Plan Year in which this Plan is adopted by the Employer.
Nondeductible Employee Contributions for Plan Years beginning
after December 31, 1986, together with any matching contributions
as defined in Section 401(m) of the Code, will be limited so as
to meet the nondiscrimination test of Section 401(m) of the Code.
A separate account will be maintained by the Plan Administrator
for the Nondeductible Employee Contributions of each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator withdraw the lesser of the portion of his or her
Individual Account attributable to his or her Nondeductible
Employee Contributions or the amount he or she contributed as
Nondeductible Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as
a result of an Employee's withdrawal of Nondeductible Employee
Contributions.
The Plan Administrator will not accept deductible employee
contributions which are made for a taxable year beginning after
December 31, 1986. Contributions made prior to that date will be
maintained in a separate account which will be nonforfeitable at
all times. The account will share in the gains and losses of the
Fund in the same manner as described in Section 4.03 of the Plan.
No part of the deductible employee contribution account will be
used to purchase life insurance. Subject to Section 6.05, joint
and survivor annuity requirements (if applicable), the
Participant may withdraw any part of the deductible employee
contribution account by making a written application to the Plan
Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If so indicated in the Adoption Agreement, an Employee may
contribute a rollover contribution to the Plan. The Plan
Administrator may require the Employee to submit a written
certification that the contribution qualifies as a rollover
contribution under the applicable provisions of the Code. If it
is later determined that all or part of a rollover contribution
was ineligible to be rolled into the Plan, the Plan Administrator
shall direct that any ineligible amounts, plus earnings
attributable thereto, be distributed from the Plan to the
Employee as soon as administratively feasible.
A separate account shall be maintained by the Plan Administrator
for each Employee's rollover contributions which will be
nonforfeitable at all times. Such account will share in the
income and gains and losses of the Fund in the manner described
in Section 4.03 and shall be subject to the Plan's provisions
governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only
allow Employees who have become Participants in the Plan to make
rollover contributions.
3.04 TRANSFER CONTRIBUTIONS
If so indicated in the Adoption Agreement, the Trustee (or
Custodian, if applicable) may receive any amounts transferred to
it from the trustee or custodian of another plan qualified under
Code Section 401(a). If it is later determined that all or part
of a transfer contribution was ineligible to be transferred into
the Plan, the Plan Administrator shall direct that any ineligible
amounts, plus earnings attributable thereto, be distributed from
the Plan to the Employee as soon as administratively feasible.
A separate account shall be maintained by the Plan Administrator
for each Employee's transfer contributions which will be
nonforfeitable at all times. Such account will share in the
income and gains and losses of the Fund in the manner described
in Section 4.03 and shall be subject to the Plan's provisions
governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only
allow Employees who have become Participants in the Plan to make
transfer contributions.
3.05 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never
participated in another qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Section
419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 415(l)(2)
of the Code, or a simplified employee pension plan, as
defined in Section 408(k) of the Code, maintained by the
Employer, which provides an annual addition as defined in
Section 3.08(E)(1), the following rules shall apply:
1. The amount of annual additions which may be credited to
the Participant's Individual Account for any limitation
year will not exceed the lesser of the maximum
permissible amount or any other limitation contained in
this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the
Participant's Individual Account would cause the annual
additions for the limitation year to exceed the maximum
permissible amount, the amount contributed or allocated
will be reduced so that the annual additions for the
limitation year will equal the maximum permissible
amount.
2. Prior to determining the Participant's actual
Compensation for the limitation year, the Employer may
determine the maximum permissible amount for a
Participant on the basis of a reasonable estimation of
the Participant's Compensation for the limitation year,
uniformly determined for all Participants similarly
situated.
3. As soon as is administratively feasible after the end of
the limitation year, the maximum permissible amount for
the limitation year will be determined on the basis of
the Participant's actual Compensation for the limitation
year.
4. If pursuant to Section 3.05(A)(3) or as a result of the
allocation of Forfeitures there is an excess amount, the
excess will be disposed of as follows:
a. Any Nondeductible Employee Contributions, to the
extent they would reduce the excess amount, will be
returned to the Participant;
b. If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered
by the Plan at the end of the limitation year, the
excess amount in the Participant's Individual Account
will be used to reduce
<PAGE>
10
Employer Contributions (including any allocation of
Forfeitures) for such Participant in the next
limitation year, and each succeeding limitation year
if necessary;
c. If after the application of paragraph (b) an excess
amount still exists, and the Participant is not
covered by the Plan at the end of a limitation year,
the excess amount will be held unallocated in a
suspense account. The suspense account will be
applied to reduce future Employer Contributions
(including allocation of any Forfeitures) for all
remaining Participants in the next limitation year,
and each succeeding limitation year if necessary;
d. If a suspense account is in existence at any time
during a limitation year pursuant to this Section, it
will not participate in the allocation of the Fund's
investment gains and losses. If a suspense account
is in existence at any time during a particular
limitation year, all amounts in the suspense account
must be allocated and reallocated to Participants'
Individual Accounts before any Employer Contributions
or any Nondeductible Employee Contributions may be
made to the Plan for that limitation year. Excess
amounts may not be distributed to Participants or
former Participants.
B. If, in addition to this Plan, the Participant is covered
under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare
benefit fund maintained by the Employer, an individual
medical account maintained by the Employer, or a simplified
employee pension maintained by the Employer that provides an
annual addition as defined in Section 3.05(E)(1), during any
limitation year, the following rules apply:
1. The annual additions which may be credited to a
Participant's Individual Account under this Plan for any
such limitation year will not exceed the maximum
permissible amount reduced by the annual additions
credited to a Participant's Individual Account under the
other qualified master or prototype plans, welfare
benefit funds, individual medical accounts and simplified
employee pensions for the same limitation year. If the
annual additions with respect to the Participant under
other qualified master or prototype defined contribution
plans, welfare benefit funds, individual medical accounts
and simplified employee pensions maintained by the
Employer are less than the maximum permissible amount and
the Employer Contribution that would otherwise be
contributed or allocated to the Participant's Individual
Account under this Plan would cause the annual additions
for the limitation year to exceed this limitation, the
amount contributed or allocated will be reduced so that
the annual additions under all such plans and funds for
the limitation year will equal the maximum permissible
amount. If the annual additions with respect to the
Participant under such other qualified master or
prototype defined contribution plans, welfare benefit
funds, individual medical accounts and simplified
employee pensions in the aggregate are equal to or
greater than the maximum permissible amount, no amount
will be contributed or allocated to the Participant's
Individual Account under this Plan for the limitation
year.
2. Prior to determining the Participant's actual
Compensation for the limitation year, the Employer may
determine the maximum permissible amount for a
Participant in the manner described in Section
3.05(A)(2).
3. As soon as is administratively feasible after the end of
the limitation year, the maximum permissible amount for
the limitation year will be determined on the basis of
the Participant's actual Compensation for the limitation
year.
4. If, pursuant to Section 3.05(B)(3) or as a result of the
allocation of Forfeitures a Participant's annual
additions under this Plan and such other plans would
result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual
additions last allocated, except that annual additions
attributable to a simplified employee pension will be
deemed to have been allocated first, followed by annual
additions to a welfare benefit fund or individual medical
account, regardless of the actual allocation date.
5. If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the excess amount
attributed to this Plan will be the product of,
a. the total excess amount allocated as of such date,
times
b. the ratio of (i) the annual additions allocated to
the Participant for the limitation year as of such
date under this Plan to (ii) the total annual
additions allocated to the Participant for the
limitation year as of such date under this and all
the other qualified prototype defined contribution
plans.
6. Any excess amount attributed to this Plan will be
disposed in the manner described in Section 3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
master or prototype plan, annual additions which may be
credited to the Participant's Individual Account under this
Plan for any limitation year will be limited in accordance
with Sections 3.05(B)(1) through 3.05(B)(6) as though the
other plan were a master or prototype plan unless the
Employer provides other limitations in the Section of the
Adoption Agreement titled "Limitation on Allocation - More
Than One Plan."
D. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in
this Plan, the sum of the Participant's defined benefit plan
fraction and defined contribution plan fraction will not
exceed 1.0 in any limitation year. The annual additions
which may be credited to the Participant's Individual Account
under this Plan for any limitation year will be limited in
accordance with the Section of the Adoption Agreement titled
"Limitation on Allocation - More Than One Plan."
E. The following terms shall have the following meanings when
used in this Section 3.05:
1. Annual additions: The sum of the following amounts
credited to a Participant's Individual Account for the
limitation year:
a. Employer Contributions,
b. Nondeductible Employee Contributions,
c. Forfeitures,
d. amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section
415(l)(2) of the Code, which is part of a pension or
annuity plan maintained by the Employer are treated
as annual additions to a defined contribution plan.
Also amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the
separate account of a key employee, as defined in
Section 419A(d)(3) of the Code, under a welfare
benefit fund, as
<PAGE>
11
defined in Section 419(e) of the Code, maintained by
the Employer are treated as annual additions to a
defined contribution plan, and
e. allocations under a simplified employee pension.
For this purpose, any excess amount applied under Section
3.05(A)(4) or 3.05(B)(6) in the limitation year to reduce
Employer Contributions will be considered annual
additions for such limitation year.
2. Compensation: Means Compensation as defined in Section
1.07 of the Plan except that Compensation for purposes of
this Section 3.05 shall not include any amounts
contributed by the Employer pursuant to a salary
reduction agreement and which is not includible in the
gross income of the Employee under Sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code even if the
Employer has elected to include such contributions in the
definition of Compensation used for other purposes under
the Plan. Further, any other exclusion the Employer has
elected (such as the exclusion of certain types of pay or
pay earned before the Employee enters the Plan) will not
apply for purposes of this Section.
Notwithstanding the preceding sentence, Compensation for
a Participant in a defined contribution plan who is
permanently and totally disabled (as defined in Section
22(e)(3) of the Code) is the Compensation such
Participant would have received for the limitation year
if the Participant had been paid at the rate of
Compensation paid immediately before becoming permanently
and totally disabled; such imputed Compensation for the
disabled Participant may be taken into account only if
the Participant is not a Highly Compensated Employee (as
defined in Section 414(q) of the Code) and contributions
made on behalf of such Participant are nonforfeitable
when made.
3. Defined benefit fraction: A fraction, the numerator of
which is the sum of the Participant's projected annual
benefits under all the defined benefit plans (whether or
not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125% of the dollar
limitation determined for the limitation year under
Section 415(b) and (d) of the Code or 140% of the highest
average compensation, including any adjustments under
Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation
year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125% of the sum of the
annual benefits under such plans which the Participant
had accrued as of the close of the last limitation year
beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May
5, 1986. The preceding sentence applies only if the
defined benefit plans individually and in the aggregate
satisfied the requirements of Section 415 of the Code for
all limitation years beginning before January 1, 1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as
in effect for the limitation year.
5. Defined contribution fraction: A fraction, the numerator
of which is the sum of the annual additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the
Employer for the current and all prior limitation years
(including the annual additions attributable to the
Participant's nondeductible employee contributions to all
defined benefit plans, whether or not terminated,
maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, individual medical accounts,
and simplified employee pensions, maintained by the
Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior
limitation years of service with the Employer (regardless
of whether a defined contribution plan was maintained by
the Employer). The maximum aggregate amount in any
limitation year is the lesser of 125% of the dollar
limitation determined under Section 415(b) and (d) of the
Code in effect under Section 415(c)(1)(A) of the Code or
35% of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the
first day of the first limitation year beginning after
December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence
on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount
equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated
using the fractions as they would be computed as of the
end of the last limitation year beginning before January
1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using
the Section 415 limitation applicable to the first
limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat
all Nondeductible Employee Contributions as annual
additions.
6. Employer: For purposes of this Section 3.05, Employer
shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations (as defined
in Section 414(b) of the Code as modified by Section
415(h)), all commonly controlled trades or businesses (as
defined in Section 414(c) as modified by Section 415(h))
or affiliated service groups (as defined in Section
414(m)) of which the adopting Employer is a part, and any
other entity required to be aggregated with the Employer
pursuant to regulations under Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average compensation
for the three consecutive years of service with the
Employer that produces the highest average.
9. Limitation year: A calendar year, or the 12-consecutive
month period elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the
Employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive
month period, the new limitation year must begin on a
date within the limitation year in which the amendment is
made.
10. Master or prototype plan: A plan the form of which is
the subject of a favorable opinion letter from the
Internal Revenue Service.
11. Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any limitation year
shall not exceed the lesser of:
a. the defined contribution dollar limitation, or
b. 25% of the Participant's Compensation for the
limitation year.
<PAGE>
12
The compensation limitation referred to in (b) shall not
apply to any contribution for medical benefits (within
the meaning of Section 401(h) or Section 419A(f)(2) of
the Code) which is otherwise treated as an annual
addition under Section 415(l)(1) or 419A(d)(2) of the
Code.
If a short limitation year is created because of an
amendment changing the limitation year to a different 12-
consecutive month period, the maximum permissible amount
will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
12. Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than
a straight life annuity or qualified joint and survivor
annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
a. the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if
later), and
b. the Participant's Compensation for the current
limitation year and all other relevant factors used
to determine benefits under the Plan will remain
constant for all future limitation years.
Straight life annuity means an annuity payable in
equal installments for the life of the Participant
that terminates upon the Participants's death.
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain an
Individual Account in the name of each Participant to reflect
the total value of his or her interest in the Fund. Each
Individual Account established hereunder shall consist of
such subaccounts as may be needed for each Participant
including:
1. a subaccount to reflect Employer Contributions and
Forfeitures allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's Nondeductible
Employee Contributions; and
5. a subaccount to reflect a Participant's deductible
employee contributions.
B. The Plan Administrator may establish additional accounts as
it may deem necessary for the proper administration of the
Plan, including, but not limited to, a suspense account for
Forfeitures as required pursuant to Section 6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's
Individual Account are invested in a Separate Fund for the
Participant, then the value of that portion of such
Participant's Individual Account at any relevant time equals
the sum of the fair market values of the assets in such
Separate Fund, less any applicable charges or penalties.
B. The fair market value of the remainder of each Individual
Account is determined in the following manner:
1. First, the portion of the Individual Account invested in
each Investment Fund as of the previous Valuation Date is
determined. Each such portion is reduced by any
withdrawal made from the applicable Investment Fund to or
for the benefit of a Participant or the Participant's
Beneficiary, further reduced by any amounts forfeited by
the Participant pursuant to Section 6.01(D) and further
reduced by any transfer to another Investment Fund since
the previous Valuation Date and is increased by any
amount transferred from another Investment Fund since the
previous Valuation Date. The resulting amounts are the
net Individual Account portions invested in the
Investment Funds.
2. Secondly, the net Individual Account portions invested in
each Investment Fund are adjusted upwards or downwards,
pro rata (i.e., ratio of each net Individual Account
portion to the sum of all net Individual Account
portions) so that the sum of all the net Individual
Account portions invested in an Investment Fund will
equal the then fair market value of the Investment Fund.
Notwithstanding the previous sentence, for the first Plan
Year only, the net Individual Account portions shall be
the sum of all contributions made to each Participant's
Individual Account during the first Plan Year.
3. Thirdly, any contributions to the Plan and Forfeitures
are allocated in accordance with the appropriate
allocation provisions of Section 3. For purposes of
Section 4, contributions made by the Employer for any
Plan Year but after that Plan Year will be considered to
have been made on the last day of that Plan Year
regardless of when paid to the Trustee (or Custodian, if
applicable).
Amounts contributed between Valuation Dates will not be
credited with investment gains or losses until the next
following Valuation Date.
4. Finally, the portions of the Individual Account invested
in each Investment Fund (determined in accordance with
(1), (2) and (3) above) are added together.
4.04 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may establish
different or additional procedures (which shall be uniform and
nondiscriminatory) for determining the fair market value of the
Individual Accounts.
4.05 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a lump
sum, the Plan Administrator may place that Participant's account
balance into a segregated Investment Fund for the purpose of
maintaining the necessary liquidity to provide benefit
installments on a periodic basis.
4.06 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the
Plan Administrator shall furnish a statement to each Participant
indicating the Individual Account balances of such Participant as
of the last Valuation Date in such Plan Year.
<PAGE>
13
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which
shall consist of the assets of the Plan held by the Trustee (or
Custodian, if applicable) pursuant to this Section 5. Assets
within the Fund may be pooled on behalf of all Participants,
earmarked on behalf of each Participant or be a combination of
pooled and earmarked. To the extent that assets are earmarked
for a particular Participant, they will be held in a Separate
Fund for that Participant.
No part of the corpus or income of the Fund may be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual
direction of investments by Participants), the Employer, not the
Trustee (or Custodian, if applicable), shall have exclusive
management and control over the investment of the Fund into any
permitted investment. Notwithstanding the preceding sentence, a
Trustee may make an agreement with the Employer whereby the
Trustee will manage the investment of all or a portion of the
Fund. Any such agreement shall be in writing and set forth such
matters as the Trustee deems necessary or desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST
POWERS
This Section 5.03 applies where a financial organization has
indicated in the Adoption Agreement that it will serve, with
respect to this Plan, as Custodian or as Trustee without full
trust powers (under applicable law). Hereinafter, a financial
organization Trustee without full trust powers (under applicable
law) shall be referred to as a Custodian. The Custodian shall
have no discretionary authority with respect to the management of
the Plan or the Fund but will act only as directed by the entity
who has such authority.
A. PERMISSIBLE INVESTMENTS - The assets of the Plan shall be
invested only in those investments which are available
through the Custodian in the ordinary course of business
which the Custodian may legally hold in a qualified plan and
which the Custodian chooses to make available to Employers
for qualified plan investments. Notwithstanding the
preceding sentence, the Prototype Sponsor may, as a condition
of making the Plan available to the Employer, limit the types
of property in which the assets of the Plan may be invested.
B. RESPONSIBILITIES OF THE CUSTODIAN - The responsibilities of
the Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between principal
and interest; provided, however, that nothing in this
Plan shall require the Custodian to maintain physical
custody of stock certificates (or other indicia of
ownership of any type of asset) representing assets
within the Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Custodian deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Custodian as of the end of each Plan Year and as of any
other times as the Custodian and Plan Administrator may
agree.
C. POWERS OF THE CUSTODIAN - Except as otherwise provided in
this Plan, the Custodian shall have the power to take any
action with respect to the Fund which it deems necessary or
advisable to discharge its responsibilities under this Plan
including, but not limited to, the following powers:
1. To invest all or a portion of the Fund (including idle
cash balances) in time deposits, savings accounts, money
market accounts or similar investments bearing a
reasonable rate of interest in the Custodian's own
savings department or the savings department of another
financial organization;
2. To vote upon any stocks, bonds, or other securities; to
give general or special proxies or powers of attorney
with or without power of substitution; to exercise any
conversion privileges or subscription rights and to make
any payments incidental thereto; to oppose, or to consent
to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate
securities, and to pay any assessment or charges in
connection therewith; and generally to exercise any of
the powers of an owner with respect to stocks, bonds,
securities or other property;
3. To hold securities or other property of the Fund in its
own name, in the name of its nominee or in bearer form;
and
4. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to
carry out the powers herein granted.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
INDIVIDUAL TRUSTEE
This Section 5.04 applies where a financial organization has
indicated in the Adoption Agreement that it will serve as Trustee
with full trust powers. This Section also applies where one or
more individuals are named in the Adoption Agreement to serve as
Trustee(s).
A. PERMISSIBLE INVESTMENTS - The Trustee may invest the assets
of the Plan in property of any character, real or personal,
including, but not limited to the following: stocks,
including shares of open-end investment companies (mutual
funds); bonds; notes; debentures; options; limited
partnership interests; mortgages; real estate or any
interests therein; unit investment trusts; Treasury Bills,
and other U.S. Government obligations; common trust funds,
combined investment trusts, collective trust funds or
commingled funds maintained by a bank or similar financial
organization (whether or not the Trustee hereunder); savings
accounts, time deposits or money market accounts of a bank or
similar financial organization (whether or not the Trustee
hereunder); annuity contracts; life insurance policies; or in
such other investments as is deemed proper without regard to
investments authorized by statute or rule of law governing
the investment of trust funds but with regard to ERISA and
this Plan.
Notwithstanding the preceding sentence, the Prototype Sponsor
may, as a condition of making the Plan available to the
Employer, limit the types of property in which the assets of
the Plan may be invested.
B. RESPONSIBILITIES OF THE TRUSTEE - The responsibilities of the
Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between principal
and interest; provided, however, that nothing in this
Plan shall require the Trustee to maintain physical
custody of stock certificates (or other indicia of
ownership) representing assets within the Fund;
<PAGE>
14
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Trustee deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Trustee as of the end of each Plan Year and as of any
other times as the Trustee and Plan Administrator may
agree.
C. POWERS OF THE TRUSTEE - Except as otherwise provided in this
Plan, the Trustee shall have the power to take any action
with respect to the Fund which it deems necessary or
advisable to discharge its responsibilities under this Plan
including, but not limited to, the following powers:
1. To hold any securities or other property of the Fund in
its own name, in the name of its nominee or in bearer
form;
2. To purchase or subscribe for securities issued, or real
property owned, by the Employer or any trade or business
under common control with the Employer but only if the
prudent investment and diversification requirements of
ERISA are satisfied;
3. To sell, exchange, convey, transfer or otherwise dispose
of any securities or other property held by the Trustee,
by private contract or at public auction. No person
dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the
validity, expediency, or propriety of any such sale or
other disposition, with or without advertisement;
4. To vote upon any stocks, bonds, or other securities; to
give general or special proxies or powers of attorney
with or without power of substitution; to exercise any
conversion privileges or subscription rights and to make
any payments incidental thereto; to oppose, or to consent
to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate
securities, and to delegate discretionary powers, and to
pay any assessments or charges in connection therewith;
and generally to exercise any of the powers of an owner
with respect to stocks, bonds, securities or other
property;
5. To invest any part or all of the Fund (including idle
cash balances) in certificates of deposit, demand or time
deposits, savings accounts, money market accounts or
similar investments of the Trustee (if the Trustee is a
bank or similar financial organization), the Prototype
Sponsor or any affiliate of such Trustee or Prototype
Sponsor, which bear a reasonable rate of interest;
6. To provide sweep services without the receipt by the
Trustee of additional compensation or other consideration
(other than reimbursement of direct expenses properly and
actually incurred in the performance of such services);
7. To hold in the form of cash for distribution or
investment such portion of the Fund as, at any time and
from time-to-time, the Trustee shall deem prudent and
deposit such cash in interest bearing or noninterest
bearing accounts;
8. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to
carry out the powers herein granted;
9. To settle, compromise, or submit to arbitration any
claims, debts, or damages due or owing to or from the
Plan, to commence or defend suits or legal or
administrative proceedings, and to represent the Plan in
all suits and legal and administrative proceedings;
10. To employ suitable agents and counsel, to contract with
agents to perform administrative and recordkeeping duties
and to pay their reasonable expenses, fees and
compensation, and such agent or counsel may or may not be
agent or counsel for the Employer;
11. To cause any part or all of the Fund, without limitation
as to amount, to be commingled with the funds of other
trusts (including trusts for qualified employee benefit
plans) by causing such money to be invested as a part of
any pooled, common, collective or commingled trust fund
(including any such fund described in the Adoption
Agreement) heretofore or hereafter created by any Trustee
(if the Trustee is a bank), by the Prototype Sponsor, by
any affiliate bank of such a Trustee or by such a Trustee
or the Prototype Sponsor, or by such an affiliate in
participation with others; the instrument or instruments
establishing such trust fund or funds, as amended, being
made part of this Plan and trust so long as any portion
of the Fund shall be invested through the medium thereof;
and
12. Generally to do all such acts, execute all such
instruments, initiate such proceedings, and exercise all
such rights and privileges with relation to property
constituting the Fund as if the Trustee were the absolute
owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian) from time-to-
time to divide and redivide the Fund into one or more Investment
Funds. Such Investment Funds may include, but not be limited to,
Investment Funds representing the assets under the control of an
investment manager pursuant to Section 5.12 and Investment Funds
representing investment options available for individual
direction by Participants pursuant to Section 5.14. Upon each
division or redivision, the Employer may specify the part of the
Fund to be allocated to each such Investment Fund and the terms
and conditions, if any, under which the assets in such Investment
Fund shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such
reasonable compensation as may be agreed upon by the Trustee (or
Custodian) and the Employer. The Trustee (or Custodian) shall be
entitled to reimbursement by the Employer for all proper expenses
incurred in carrying out his or her duties under this Plan,
including reasonable legal, accounting and actuarial expenses.
If not paid by the Employer, such compensation and expenses may
be charged against the Fund.
All taxes of any kind that may be levied or assessed under
existing or future laws upon, or in respect of, the Fund or the
income thereof shall be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if
applicable) and Plan Administrator the information which each
party deems necessary for the administration of the Plan
including, but not limited to, changes in a Participant's status,
eligibility, mailing addresses and other such data as may be
required. The Trustee (or Custodian) and Plan Administrator
shall be entitled to act on such information as is supplied them
and shall have no duty or responsibility to further verify or
question such information.
<PAGE>
15
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding
federal income taxes from distributions from the Plan, unless the
Participant (or Beneficiary, where applicable) elects not to have
such taxes withheld. The Trustee (or Custodian) or other payor
may act as agent for the Plan Administrator to withhold such
taxes and to make the appropriate distribution reports, if the
Plan Administrator furnishes all the information to the Trustee
(or Custodian) or other payor it may need to do withholding and
reporting.
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any time
by giving 30 days advance written notice to the Employer. The
resignation shall become effective 30 days after receipt of such
notice unless a shorter period is agreed upon.
The Employer may remove any Trustee (or Custodian) at any time by
giving written notice to such Trustee (or Custodian) and such
removal shall be effective 30 days after receipt of such notice
unless a shorter period is agreed upon. The Employer shall have
the power to appoint a successor Trustee (or Custodian).
Upon such resignation or removal, if the resigning or removed
Trustee (or Custodian) is the sole Trustee (or Custodian), he or
she shall transfer all of the assets of the Fund then held by
such Trustee (or Custodian) as expeditiously as possible to the
successor Trustee (or Custodian) after paying or reserving such
reasonable amount as he or she shall deem necessary to provide
for the expense in the settlement of the accounts and the amount
of any compensation due him or her and any sums chargeable
against the Fund for which he or she may be liable. If the Funds
as reserved are not sufficient for such purpose, then he or she
shall be entitled to reimbursement from the successor Trustee (or
Custodian) out of the assets in the successor Trustee's (or
Custodian's) hands under this Plan. If the amount reserved shall
be in excess of the amount actually needed, the former Trustee
(or Custodian) shall return such excess to the successor Trustee
(or Custodian).
Upon receipt of the transferred assets, the successor Trustee (or
Custodian) shall thereupon succeed to all of the powers and
responsibilities given to the Trustee (or Custodian) by this
Plan.
The resigning or removed Trustee (or Custodian) shall render an
accounting to the Employer and unless objected to by the Employer
within 30 days of its receipt, the accounting shall be deemed to
have been approved and the resigning or removed Trustee (or
Custodian) shall be released and discharged as to all matters set
forth in the accounting. Where a financial organization is
serving as Trustee (or Custodian) and it is merged with or bought
by another organization (or comes under the control of any
federal or state agency), that organization shall serve as the
successor Trustee (or Custodian) of this Plan, but only if it is
the type of organization that can so serve under applicable law.
Where the Trustee or Custodian is serving as a nonbank trustee or
custodian pursuant to Section 1.401-12(n) of the Income Tax
Regulations, the Employer will appoint a successor Trustee (or
Custodian) upon notification by the Commissioner of Internal
Revenue that such substitution is required because the Trustee
(or Custodian) has failed to comply with the requirements of
Section 1.401-12(n) or is not keeping such records or making such
returns or rendering such statements as are required by forms or
regulations.
5.10 DEGREE OF CARE - LIMITATIONS OF LIABILITY
The Trustee (or Custodian) shall not be liable for any losses
incurred by the Fund by any direction to invest communicated by
the Employer, Plan Administrator, investment manager appointed
pursuant to Section 5.12 or any Participant or Beneficiary. The
Trustee (or Custodian) shall be under no liability for
distributions made or other action taken or not taken at the
written direction of the Plan Administrator. It is specifically
understood that the Trustee (or Custodian) shall have no duty or
responsibility with respect to the determination of matters
pertaining to the eligibility of any Employee to become a
Participant or remain a Participant hereunder, the amount of
benefit to which a Participant or Beneficiary shall be entitled
to receive hereunder, whether a distribution to Participant or
Beneficiary is appropriate under the terms of the Plan or the
size and type of any policy to be purchased from any insurer for
any Participant hereunder or similar matters; it being understood
that all such responsibilities under the Plan are vested in the
Plan Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
Notwithstanding any other provision herein, and except as may be
otherwise provided by ERISA, the Employer shall indemnify and
hold harmless the Trustee (or Custodian, if applicable) and the
Prototype Sponsor, their officers, directors, employees, agents,
their heirs, executors, successors and assigns, from and against
any and all liabilities, damages, judgments, settlements, losses,
costs, charges, or expenses (including legal expenses) at any
time arising out of or incurred in connection with any action
taken by such parties in the performance of their duties with
respect to this Plan, unless there has been a final adjudication
of gross negligence or willful misconduct in the performance of
such duties.
Further, except as may be otherwise provided by ERISA, the
Employer will indemnify the Trustee (or Custodian) and Prototype
Sponsor from any liability, claim or expense (including legal
expense) which the Trustee (or Custodian) and Prototype Sponsor
shall incur by reason of or which results, in whole or in part,
from the Trustee's (or Custodian's) or Prototype Sponsor's
reliance on the facts and other directions and elections the
Employer communicates or fails to communicate.
5.12 INVESTMENT MANAGERS
A. DEFINITION OF INVESTMENT MANAGER - The Employer may appoint
one or more investment managers to make investment decisions
with respect to all or a portion of the Fund. The investment
manager shall be any firm or individual registered as an
investment adviser under the Investment Advisers Act of 1940,
a bank as defined in said Act or an insurance company
qualified under the laws of more than one state to perform
services consisting of the management, acquisition or
disposition of any assets of the Plan.
B. INVESTMENT MANAGER'S AUTHORITY - A separate Investment Fund
shall be established representing the assets of the Fund
invested at the direction of the investment manager. The
investment manager so appointed shall direct the Trustee (or
Custodian, if applicable ) with respect to the investment of
such Investment Fund. The investments which may be acquired
at the direction of the investment manager are those
described in Section 5.03(A) (for Custodians) or Section
5.04(A) (for Trustees).
C. WRITTEN AGREEMENT - The appointment of any investment manager
shall be by written agreement between the Employer and the
investment manager and a copy of such agreement (and any
modification or termination thereof) must be given to the
Trustee (or Custodian).
The agreement shall set forth, among other matters, the
effective date of the investment manager's appointment and an
acknowledgement by the investment manager that it is a
fiduciary of the Plan under ERISA.
<PAGE>
16
D. CONCERNING THE TRUSTEE (OR CUSTODIAN) - Written notice of
each appointment of an investment manager shall be given to
the Trustee (or Custodian) in advance of the effective date
of such appointment. Such notice shall specify which portion
of the Fund will constitute the Investment Fund subject to
the investment manager's direction. The Trustee (or
Custodian) shall comply with the investment direction given
to it by the investment manager and will not be liable for
any loss which may result by reason of any action (or
inaction) it takes at the direction of the investment
manager.
5.13 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a
Participant, the aggregate premium for certain life insurance
for each Participant must be less than a certain percentage
of the aggregate Employer Contributions and Forfeitures
allocated to a Participant's Individual Account at any
particular time as follows:
1. Ordinary Life Insurance - For purposes of these
incidental insurance provisions, ordinary life insurance
contracts are contracts with both nondecreasing death
benefits and nonincreasing premiums. If such contracts
are purchased, less than 50% of the aggregate Employer
Contributions and Forfeitures allocated to any
Participant's Individual Account will be used to pay the
premiums attributable to them.
2. Term and Universal Life Insurance - No more than 25% of
the aggregate Employer Contributions and Forfeitures
allocated to any Participant's Individual Account will be
used to pay the premiums on term life insurance
contracts, universal life insurance contracts, and all
other life insurance contracts which are not ordinary
life.
3. Combination - The sum of 50% of the ordinary life
insurance premiums and all other life insurance premiums
will not exceed 25% of the aggregate Employer
Contributions and Forfeitures allocated to any
Participant's Individual Account.
If this Plan is a profit sharing plan, the above
incidental benefits limits do not apply to life
insurance contracts purchased with Employer
Contributions and Forfeitures that have been in the
Participant's Individual Account for at least 2 full
Plan Years, measured from the date such contributions
were allocated.
B. Any dividends or credits earned on insurance contracts for a
Participant shall be allocated to such Participant's
Individual Account.
C. Subject to Section 6.05, the contracts on a Participant's
life will be converted to cash or an annuity or distributed
to the Participant upon commencement of benefits.
D. The Trustee (or Custodian, if applicable) shall apply for and
will be the owner of any insurance contract(s) purchased
under the terms of this Plan. The insurance contract(s) must
provide that proceeds will be payable to the Trustee (or
Custodian), however, the Trustee (or Custodian) shall be
required to pay over all proceeds of the contract(s) to the
Participant's designated Beneficiary in accordance with the
distribution provisions of this Plan. A Participant's spouse
will be the designated Beneficiary of the proceeds in all
circumstances unless a qualified election has been made in
accordance with Section 6.05. Under no circumstances shall
the Fund retain any part of the proceeds. In the event of
any conflict between the terms of this Plan and the terms of
any insurance contract purchased hereunder, the Plan
provisions shall control.
E. The Plan Administrator may direct the Trustee (or Custodian)
to sell and distribute insurance or annuity contracts to a
Participant (or other party as may be permitted) in
accordance with applicable law or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Trustee (or Custodian, if applicable)
regarding the investment of part or all of his or her Individual
Account. To the extent so directed, the Employer, Plan
Administrator, Trustee (or Custodian) and all other fiduciaries
are relieved of their fiduciary responsibility under Section 404
of ERISA.
The Plan Administrator shall direct that a Separate Fund be
established in the name of each Participant who directs the
investment of part or all of his or her Individual Account. Each
Separate Fund shall be charged or credited (as appropriate) with
the earnings, gains, losses or expenses attributable to such
Separate Fund. No fiduciary shall be liable for any loss which
results from a Participant's individual direction. The assets
subject to individual direction shall not be invested in
collectibles as that term is defined in Section 408(m) of the
Code.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules relating to individual direction as it
deems necessary or advisable including, but not limited to, rules
describing (1) which portions of Participant's Individual Account
can be individually directed; (2) the frequency of investment
changes; (3) the forms and procedures for making investment
changes; and (4) the effect of a Participant's failure to make a
valid direction.
The Plan Administrator may, in a uniform and nondiscriminatory
manner, limit the available investments for Participants'
individual direction to certain specified investment options
(including, but not limited to, certain mutual funds, investment
contracts, deposit accounts and group trusts). The Plan
Administrator may permit, in a uniform and nondiscriminatory
manner, a Beneficiary of a deceased Participant or the alternate
payee under a qualified domestic relations order (as defined in
Section 414(p) of the Code) to individually direct in accordance
with this Section.
SECTION SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. DISTRIBUTABLE EVENTS
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account shall be distributable
to the Participant upon (1) the occurrence of any of the
distributable events specified in the Adoption Agreement;
(2) the Participant's Termination of Employment after
attaining Normal Retirement Age; (3) the termination of
the Plan; and (4) the Participant's Termination of
Employment after satisfying any Early Retirement Age
conditions.
If a Participant separates from service before satisfying
the Early Retirement Age requirement, but has satisfied
the service requirement, the Participant will be entitled
to elect an early retirement benefit upon satisfaction of
such age requirement.
2. Written Request: When Distributed - A Participant
entitled to distribution who wishes to receive a
distribution must submit a written request to the Plan
Administrator. Such request shall be made upon a form
provided by the Plan Administrator. Upon a valid
request, the Plan Administrator shall direct the Trustee
(or Custodian, if applicable) to commence distribution no
later than the time specified in the Adoption Agreement
for this purpose and, if not specified in the Adoption
Agreement, then no later than 90 days following the later
of:
<PAGE>
17
a. the close of the Plan Year within which the event
occurs which entitles the Participant to
distribution; or
b. the close of the Plan Year in which the request is
received.
3. Special Rules for Withdrawals During Service - If this is
a profit sharing plan and the Adoption Agreement so
provides, a Participant may elect to receive a
distribution of all or part of the Vested portion of his
or her Individual Account, subject to the requirements of
Section 6.05 and further subject to the following limits:
a. Participant for 5 or more years. An Employee who has
been a Participant in the Plan for 5 or more years
may withdraw up to the entire Vested portion of his
or her Individual Account.
b. Participant for less than 5 years. An Employee who
has been a Participant in the Plan for less than 5
years may withdraw only the amount which has been in
his or her Individual Account attributable to
Employer Contributions for at least 2 full Plan
Years, measured from the date such contributions were
allocated. However, if the distribution is on
account of hardship, the Participant may withdraw up
to his or her entire Vested portion of the
Participant's Individual Account. For this purpose,
hardship shall have the meaning set forth in Section
6.01(A)(4) of the Code.
4. Special Rules for Hardship Withdrawals - If this is a
profit sharing plan and the Adoption Agreement so
provides, a Participant may elect to receive a hardship
distribution of all or part of the Vested portion of his
or her Individual Account, subject to the requirements of
Section 6.05 and further subject to the following limits:
a. Participant for 5 or more years. An Employee who has
been a Participant in the Plan for 5 or more years
may withdraw up to the entire Vested portion of his
or her Individual Account.
b. Participant for less than 5 years. An Employee who
has been a Participant in the Plan for less than 5
years may withdraw only the amount which has been in
his or her Individual Account attributable to
Employer Contributions for at least 2 full Plan
Years, measured from the date such contributions were
allocated.
For purposes of this Section 6.01(A)(4) and Section
6.01(A)(3) hardship is defined as an immediate and
heavy financial need of the Participant where such
Participant lacks other available resources. The
following are the only financial needs considered
immediate and heavy: expenses incurred or necessary
for medical care, described in Section 213(d) of the
Code, of the Employee, the Employee's spouse or
dependents; the purchase (excluding mortgage
payments) of a principal residence for the Employee;
payment of tuition and related educational fees for
the next 12 months of post-secondary education for
the Employee, the Employee's spouse, children or
dependents; or the need to prevent the eviction of
the Employee from, or a foreclosure on the mortgage
of, the Employee's principal residence.
A distribution will be considered as necessary to
satisfy an immediate and heavy financial need of the
Employee only if:
1) The employee has obtained all distributions,
other than hardship distributions, and all
nontaxable loans under all plans maintained by
the Employer;
2) The distribution is not in excess of the amount
of an immediate and heavy financial need
(including amounts necessary to pay any federal,
state or local income taxes or penalties
reasonably anticipated to result from the
distribution).
5. One-Time In-Service Withdrawal Option - If this is a
profit sharing plan and the Employer has elected the one-
time in-service withdrawal option in the Adoption
Agreement, then Participants will be permitted only one
in-service withdrawal during the course of such
Participants employment with the Employer. The amount
which the Participant can withdraw will be limited to the
lesser of the amount determined under the limits set
forth in Section 6.01(A)(3) or the percentage of the
Participant's Individual Account specified by the
Employer in the Adoption Agreement. Distributions under
this Section will be subject to the requirements of
Section 6.05.
6. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the
60th day after the latest of the close of the Plan Year
in which:
a. the Participant attains Normal Retirement Age;
b. occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
c. the Participant incurs a Termination of Employment.
Notwithstanding the foregoing, the failure of a Participant
and spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of Section
6.02(B) of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to
satisfy this Section.
B. DETERMINING THE VESTED PORTION - In determining the Vested
portion of a Participant's Individual Account, the following
rules apply:
1. Employer Contributions and Forfeitures - The Vested
portion of a Participant's Individual Account derived
from Employer Contributions and Forfeitures is determined
by applying the vesting schedule selected in the Adoption
Agreement (or the vesting schedule described in Section
6.01(C) if the Plan is a Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is
fully Vested in his or her rollover contributions and
transfer contributions.
3. Fully Vested Under Certain Circumstances - A Participant
is fully Vested in his or her Individual Account if any
of the following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Plan is terminated or partially terminated; or
c. there exists a complete discontinuance of
contributions under the Plan.
Further, unless otherwise indicated in the Adoption
Agreement, a Participant is fully Vested if the
Participant dies, incurs a Disability, or satisfies the
conditions for Early Retirement Age (if applicable).
<PAGE>
18
4. Participants in a Prior Plan - If a Participant was a
participant in a Prior Plan on the Effective Date, his or
her Vested percentage shall not be less than it would
have been under such Prior Plan as computed on the
Effective Date.
C. MINIMUM VESTING SCHEDULE FOR TOP-HEAVY PLANS - The following
vesting provisions apply for any Plan Year in which this Plan
is a Top-Heavy Plan.
Notwithstanding the other provisions of this Section 6.01 or
the vesting schedule selected in the Adoption Agreement
(unless those provisions or that schedule provide for more
rapid vesting), a Participant's Vested portion of his or her
Individual Account attributable to Employer Contributions and
Forfeitures shall be determined in accordance with the
vesting schedule elected by the Employer in the Adoption
Agreement (and if no election is made the 6 year graded
schedule will be deemed to have been elected) as described
below:
<TABLE>
<CAPTION>
6 YEAR GRADED 3 YEAR CLIFF
Years of Years of
Vesting Service Vested Percentage Vesting Service Vested Percentage
<S> <C> <C> <C>
1 0 1 0
2 20 2 0
3 40 3 100
4 60
5 80
6 100
</TABLE>
This minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code, except those
attributable to Nondeductible Employee Contributions
including benefits accrued before the effective date of
Section 416 of the Code and benefits accrued before the Plan
became a Top-Heavy Plan. Further, no decrease in a
Participant's Vested percentage may occur in the event the
Plan's status as a Top-Heavy Plan changes for any Plan Year.
However, this Section 6.01(C) does not apply to the
Individual Account of any Employee who does not have an Hour
of Service after the Plan has initially become a Top-Heavy
Plan and such Employee's Individual Account attributable to
Employer Contributions and Forfeitures will be determined
without regard to this Section.
If this Plan ceases to be a Top-Heavy Plan, then in
accordance with the above restrictions, the vesting schedule
as selected in the Adoption Agreement will govern. If the
vesting schedule under the Plan shifts in or out of top-heavy
status, such shift is an amendment to the vesting schedule
and the election in Section 9.04 applies.
D. BREAK IN VESTING SERVICE AND FORFEITURES - If a Participant
incurs a Termination of Employment, any portion of his or her
Individual Account which is not Vested shall be held in a
suspense account. Such suspense account shall share in any
increase or decrease in the fair market value of the assets
of the Fund in accordance with Section 4 of the Plan. The
disposition of such suspense account shall be as follows:
1. Breaks in Vesting Service - If a Participant neither
receives nor is deemed to receive a distribution pursuant
to Section 6.01(D)(3) or (4) and the Participant returns
to the service of the Employer before incurring 5
consecutive Breaks in Vesting Service, there shall be no
Forfeiture and the amount in such suspense account shall
be recredited to such Participant's Individual Account.
2. Five Consecutive Breaks in Vesting Service - If a
Participant neither receives nor is deemed to receive a
distribution pursuant to Section 6.01(D)(3) or (4) and
the Participant does not return to the service of the
Employer before incurring 5 consecutive Breaks in Vesting
Service, the portion of the Participant's Individual
Account which is not Vested shall be treated as a
Forfeiture and allocated in accordance with Section
3.01(C).
3. Cash-out of Certain Participants - If the value of the
Vested portion of such Participant's Individual Account
derived from Nondeductible Employee Contributions and
Employer Contributions does not exceed $3,500, the
Participant shall receive a distribution of the entire
Vested portion of such Individual Account and the portion
which is not Vested shall be treated as a Forfeiture and
allocated in accordance with Section 3.01(C). For
purposes of this Section, if the value of the Vested
portion of a Participant's Individual Account is zero,
the Participant shall be deemed to have received a
distribution of such Vested Individual Account. A
Participant's Vested Individual Account balance shall not
include accumulated deductible employee contributions
within the meaning of Section 72(o)(5)(B) of the Code for
Plan Years beginning prior to January 1, 1989.
4. Participants Who Elect to Receive Distributions - If such
Participant elects to receive a distribution, in
accordance with Section 6.02(B), of the value of the
Vested portion of his or her Individual Account derived
from Nondeductible Employee Contributions and Employer
Contributions, the portion which is not Vested shall be
treated as a Forfeiture and allocated in accordance with
Section 3.01(C).
5. Re-employed Participants - If a Participant receives or
is deemed to receive a distribution pursuant to Section
6.01(D)(3) or (4) above and the Participant resumes
employment covered under this Plan, the Participant's
Employer-derived Individual Account balance will be
restored to the amount on the date of distribution if the
Participant repays to the Plan the full amount of the
distribution attributable to Employer Contributions
before the earlier of 5 years after the first date on
which the Participant is subsequently re-employed by the
Employer, or the date the Participant incurs 5
consecutive Breaks in Vesting Service following the date
of the distribution.
Any restoration of a Participant's Individual Account
pursuant to Section 6.01(D)(5) shall be made from other
Forfeitures, income or gain to the Fund or contributions
made by the Employer.
E. DISTRIBUTION PRIOR TO FULL VESTING - If a distribution is
made to a Participant who was not then fully Vested in his or
her Individual Account derived from Employer Contributions
and the Participant may increase his or her Vested percentage
in his or her Individual Account, then the following rules
shall apply:
1. a separate account will be established for the
Participant's interest in the Plan as of the time of the
distribution, and
2. at any relevant time the Participant's Vested portion of
the separate account will be equal to an amount ("X")
determined by the formula: X=P (AB + (R x D)) - (R x D)
where "P" is the Vested percentage at the relevant time,
"AB" is the separate account balance at the relevant
time; "D" is the amount of the distribution; and "R" is
the ratio of the separate account balance at the relevant
time to the separate account balance after distribution.
<PAGE>
19
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. VALUE OF INDIVIDUAL ACCOUNT DOES NOT EXCEED $3,500 - If the
value of the Vested portion of a Participant's Individual
Account derived from Nondeductible Employee Contributions and
Employer Contributions does not exceed $3,500, distribution
from the Plan shall be made to the Participant in a single
lump sum in lieu of all other forms of distribution from the
Plan as soon as administratively feasible.
B. VALUE OF INDIVIDUAL ACCOUNT EXCEEDS $3,500
1. If the value of the Vested portion of a Participant's
Individual Account derived from Nondeductible Employee
Contributions and Employer Contributions exceeds (or at
the time of any prior distribution exceeded) $3,500, and
the Individual Account is immediately distributable, the
Participant and the Participant's spouse (or where either
the Participant or the spouse died, the survivor) must
consent to any distribution of such Individual Account.
The consent of the Participant and the Participant's
spouse shall be obtained in writing within the 90-day
period ending on the annuity starting date. The annuity
starting date is the first day of the first period for
which an amount is paid as an annuity or any other form.
The Plan Administrator shall notify the Participant and
the Participant's spouse of the right to defer any
distribution until the Participant's Individual Account
is no longer immediately distributable. Such
notification shall include a general description of the
material features, and an explanation of the relative
values of, the optional forms of benefit available under
the Plan in a manner that would satisfy the notice
requirements of Section 417(a)(3) of the Code, and shall
be provided no less than 30 days and no more than 90 days
prior to the annuity starting date.
If a distribution is one to which Sections 401(a)(11) and
417 of the Internal Revenue Code do not apply, such
distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
a. the Plan Administrator clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option), and
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
Notwithstanding the foregoing, only the Participant
need consent to the commencement of a distribution in
the form of a qualified joint and survivor annuity
while the Individual Account is immediately
distributable. Neither the consent of the
Participant nor the Participant's spouse shall be
required to the extent that a distribution is
required to satisfy Section 401(a)(9) or Section 415
of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option
(purchased from a commercial provider), the
Participant's Individual Account may, without the
Participant's consent, be distributed to the
Participant or transferred to another defined
contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of
the Code) within the same controlled group.
An Individual Account is immediately distributable if
any part of the Individual Account could be
distributed to the Participant (or surviving spouse)
before the Participant attains or would have attained
(if not deceased) the later of Normal Retirement Age
or age 62.
2. For purposes of determining the applicability of the
foregoing consent requirements to distributions made
before the first day of the first Plan Year beginning
after December 31, 1988, the Vested portion of a
Participant's Individual Account shall not include
amounts attributable to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B)
of the Code.
C. OTHER FORMS OF DISTRIBUTION TO PARTICIPANT - If the value of
the Vested portion of a Participant's Individual Account
exceeds $3,500 and the Participant has properly waived the
joint and survivor annuity, as described in Section 6.05, the
Participant may request in writing that the Vested portion of
his or her Individual Account be paid to him or her in one or
more of the following forms of payment: (1) in a lump sum;
(2) in installment payments over a period not to exceed the
life expectancy of the Participant or the joint and last
survivor life expectancy of the Participant and his or her
designated Beneficiary; or (3) applied to the purchase of an
annuity contract.
Notwithstanding anything in this Section 6.02 to the
contrary, a Participant cannot elect payments in the form of
an annuity if the Retirement Equity Act safe harbor rules of
Section 6.05(F) apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. DESIGNATION OF BENEFICIARY - SPOUSAL CONSENT - Each
Participant may designate, upon a form provided by and
delivered to the Plan Administrator, one or more primary and
contingent Beneficiaries to receive all or a specified
portion of the Participant's Individual Account in the event
of his or her death. A Participant may change or revoke such
Beneficiary designation from time to time by completing and
delivering the proper form to the Plan Administrator.
In the event that a Participant wishes to designate a primary
Beneficiary who is not his or her spouse, his or her spouse
must consent in writing to such designation, and the spouse's
consent must acknowledge the effect of such designation and
be witnessed by a notary public or plan representative.
Notwithstanding this consent requirement, if the Participant
establishes to the satisfaction of the Plan Administrator
that such written consent may not be obtained because there
is no spouse or the spouse cannot be located, no consent
shall be required. Any change of Beneficiary will require a
new spousal consent.
B. PAYMENT TO BENEFICIARY - If a Participant dies before the
Participant's entire Individual Account has been paid to him
or her, such deceased Participant's Individual Account shall
be payable to any surviving Beneficiary designated by the
Participant, or, if no Beneficiary survives the Participant,
to the Participant's estate.
C. WRITTEN REQUEST: WHEN DISTRIBUTED - A Beneficiary of a
deceased Participant entitled to a distribution who wishes to
receive a distribution must submit a written request to the
Plan Administrator. Such request shall be made upon a form
provided by the Plan Administrator. Upon a valid request,
the Plan Administrator shall direct the Trustee (or
Custodian) to commence distribution no later than the time
specified in the Adoption Agreement for this purpose and if
not specified in the Adoption Agreement, then no later than
90 days following the later of:
1. the close of the Plan Year within which the Participant
dies; or
2. the close of the Plan Year in which the request is
received.
<PAGE>
20
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. VALUE OF INDIVIDUAL ACCOUNT DOES NOT EXCEED $3,500 - If the
value of the Participant's Individual Account derived from
Nondeductible Employee Contributions and Employer
Contributions does not exceed $3,500, the Plan Administrator
shall direct the Trustee (or Custodian, if applicable) to
make a distribution to the Beneficiary in a single lump sum
in lieu of all other forms of distribution from the Plan.
B. VALUE OF INDIVIDUAL ACCOUNT EXCEEDS $3,500 - If the value of
a Participant's Individual Account derived from Nondeductible
Employee Contributions and Employer Contributions exceeds
$3,500 the preretirement survivor annuity requirements of
Section 6.05 shall apply unless waived in accordance with
that Section or unless the Retirement Equity Act safe harbor
rules of Section 6.05(F) apply. However, a surviving spouse
Beneficiary may elect any form of payment allowable under the
Plan in lieu of the preretirement survivor annuity. Any such
payment to the surviving spouse must meet the requirements of
Section 6.06.
C. OTHER FORMS OF DISTRIBUTION TO BENEFICIARY - If the value of
a Participant's Individual Account exceeds $3,500 and the
Participant has properly waived the preretirement survivor
annuity, as described in Section 6.05 (if applicable) or if
the Beneficiary is the Participant's surviving spouse, the
Beneficiary may, subject to the requirements of Section 6.06,
request in writing that the Participant's Individual Account
be paid as follows: (1) in a lump sum; or (2) in installment
payments over a period not to exceed the life expectancy of
such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant
who is credited with at least one Hour of Eligibility Service
with the Employer on or after August 23, 1984, and such other
Participants as provided in Section 6.05(G).
B. QUALIFIED JOINT AND SURVIVOR ANNUITY - Unless an optional
form of benefit is selected pursuant to a qualified election
within the 90-day period ending on the annuity starting date,
a married Participant's Vested account balance will be paid
in the form of a qualified joint and survivor annuity and an
unmarried Participant's Vested account balance will be paid
in the form of a life annuity. The Participant may elect to
have such annuity distributed upon attainment of the earliest
retirement age under the Plan.
C. QUALIFIED PRERETIREMENT SURVIVOR ANNUITY - Unless an optional
form of benefit has been selected within the election period
pursuant to a qualified election, if a Participant dies
before the annuity starting date then the Participant's
Vested account balance shall be applied toward the purchase
of an annuity for the life of the surviving spouse. The
surviving spouse may elect to have such annuity distributed
within a reasonable period after the Participant's death.
D. DEFINITIONS
1. Election Period - The period which begins on the first
day of the Plan Year in which the Participant attains age
35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day
of the Plan Year in which age 35 is attained, with
respect to the account balance as of the date of
separation, the election period shall begin on the date
of separation.
Pre-age 35 waiver - A Participant who will not yet attain
age 35 as of the end of any current Plan Year may make
special qualified election to waive the qualified
preretirement survivor annuity for the period beginning
on the date of such election and ending on the first day
of the Plan Year in which the Participant will attain age
35. Such election shall not be valid unless the
Participant receives a written explanation of the
qualified preretirement survivor annuity in such terms as
are comparable to the explanation required under Section
6.05(E)(1). Qualified preretirement survivor annuity
coverage will be automatically reinstated as of the first
day of the Plan Year in which the Participant attains age
35. Any new waiver on or after such date shall be
subject to the full requirements of this Section 6.05.
2. Earliest Retirement Age - The earliest date on which,
under the Plan, the Participant could elect to receive
retirement benefits.
3. Qualified Election - A waiver of a qualified joint and
survivor annuity or a qualified preretirement survivor
annuity. Any waiver of a qualified joint and survivor
annuity or a qualified preretirement survivor annuity
shall not be effective unless: (a) the Participant's
spouse consents in writing to the election, (b) the
election designates a specific Beneficiary, including any
class of beneficiaries or any contingent beneficiaries,
which may not be changed without spousal consent (or the
spouse expressly permits designations by the Participant
without any further spousal consent); (c) the spouse's
consent acknowledges the effect of the election; and (d)
the spouse's consent is witnessed by a plan
representative or notary public. Additionally, a
Participant's waiver of the qualified joint and survivor
annuity shall not be effective unless the election
designates a form of benefit payment which may not be
changed without spousal consent (or the spouse expressly
permits designations by the Participant without any
further spousal consent). If it is established to the
satisfaction of a plan representative that there is no
spouse or that the spouse cannot be located, a waiver
will be deemed a qualified election.
Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be
obtained) shall be effective only with respect to such
spouse. A consent that permits designations by the
Participant without any requirement of further consent by
such spouse must acknowledge that the spouse has the
right to limit consent to a specific Beneficiary, and a
specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of
such rights. A revocation of a prior waiver may be made
by a Participant without the consent of the spouse at any
time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained
under this provision shall be valid unless the
Participant has received notice as provided in Section
6.05(E) below.
4. Qualified Joint and Survivor Annuity - An immediate
annuity for the life of the Participant with a survivor
annuity for the life of the spouse which is not less than
50% and not more than 100% of the amount of the annuity
which is payable during the joint lives of the
Participant and the spouse and which is the amount of
benefit which can be purchased with the Participant's
vested account balance. The percentage of the survivor
annuity under the Plan shall be 50% (unless a different
percentage is elected by the Employer in the Adoption
Agreement).
5. Spouse (surviving spouse) - The spouse or surviving
spouse of the Participant, provided that a former spouse
will be treated as the spouse or surviving spouse and a
current spouse will not be treated as the spouse or
surviving spouse to the extent provided under a qualified
domestic relations order as described in Section 414(p)
of the Code.
6. Annuity Starting Date - The first day of the first period
for which an amount is paid as an annuity or any other
form.
<PAGE>
21
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from
Employer and Nondeductible Employee Contributions
(including rollovers), whether Vested before or upon
death, including the proceeds of insurance contracts, if
any, on the Participant's life. The provisions of this
Section 6.05 shall apply to a Participant who is Vested
in amounts attributable to Employer Contributions,
Nondeductible Employee Contributions (or both) at the
time of death or distribution.
E. NOTICE REQUIREMENTS
1. In the case of a qualified joint and survivor annuity,
the Plan Administrator shall no less than 30 days and not
more than 90 days prior to the annuity starting date
provide each Participant a written explanation of: (a)
the terms and conditions of a qualified joint and
survivor annuity; (b) the Participant's right to make and
the effect of an election to waive the qualified joint
and survivor annuity form of benefit; (c) the rights of a
Participant's spouse; and (d) the right to make, and the
effect of, a revocation of a previous election to waive
the qualified joint and survivor annuity.
2. In the case of a qualified preretirement annuity as
described in Section 6.05(C), the Plan Administrator
shall provide each Participant within the applicable
period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms
and in such manner as would be comparable to the
explanation provided for meeting the requirements of
Section 6.05(E)(1) applicable to a qualified joint and
survivor annuity.
The applicable period for a Participant is whichever of
the following periods ends last: (a) the period
beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the
Participant attains age 35; (b) a reasonable period
ending after the individual becomes a Participant; (c) a
reasonable period ending after Section 6.05(E)(3) ceases
to apply to the Participant; and, (d) a reasonable period
ending after this Section 6.05 first applies to the
Participant. Notwithstanding the foregoing, notice must
be provided within a reasonable period ending after
separation from service in the case of a Participant who
separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (b), (c) and (d) is the end of the two-year
period beginning one year prior to the date the
applicable event occurs, and ending one year after that
date. In the case of a Participant who separates from
service before the Plan Year in which age 35 is attained,
notice shall be provided within the two-year period
beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter
returns to employment with the Employer, the applicable
period for such Participant shall be redetermined.
3. Notwithstanding the other requirements of this Section
6.05(E), the respective notices prescribed by this
Section 6.05(E), need not be given to a Participant if
(a) the Plan "fully subsidizes" the costs of a qualified
joint and survivor annuity or qualified preretirement
survivor annuity, and (b) the Plan does not allow the
Participant to waive the qualified joint and survivor
annuity or qualified preretirement survivor annuity and
does not allow a married Participant to designate a
nonspouse beneficiary. For purposes of this Section
6.05(E)(3), a plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits
to the Participant may result from the Participant's
failure to elect another benefit.
F. RETIREMENT EQUITY ACT SAFE HARBOR RULES
1. If the Employer so indicates in the Adoption Agreement,
this Section 6.05(F) shall apply to a Participant in a
profit sharing plan, and shall always apply to any
distribution, made on or after the first day of the first
Plan Year beginning after December 31, 1988, from or
under a separate account attributable solely to
accumulated deductible employee contributions, as defined
in Section 72(o)(5)(B) of the Code, and maintained on
behalf of a Participant in a money purchase pension plan,
(including a target benefit plan) if the following
conditions are satisfied:
a. the Participant does not or cannot elect payments in
the form of a life annuity; and
b. on the death of a Participant, the Participant's
Vested account balance will be paid to the
Participant's surviving spouse, but if there is no
surviving spouse, or if the surviving spouse has
consented in a manner conforming to a qualified
election, then to the Participant's designated
Beneficiary. The surviving spouse may elect to have
distribution of the Vested account balance commence
within the 90-day period following the date of the
Participant's death. The account balance shall be
adjusted for gains or losses occurring after the
Participant's death in accordance with the provisions
of the Plan governing the adjustment of account
balances for other types of distributions. This
Section 6.05(F) shall not be operative with respect
to a Participant in a profit sharing plan if the plan
is a direct or indirect transferee of a defined
benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is
subject to the survivor annuity requirements of
Section 401(a)(11) and Section 417 of the code. If
this Section 6.05(F) is operative, then the
provisions of this Section 6.05 other than Section
6.05(G) shall be inoperative.
2. The Participant may waive the spousal death benefit
described in this Section 6.05(F) at any time provided
that no such waiver shall be effective unless it
satisfies the conditions of Section 6.05(D)(3) (other
than the notification requirement referred to therein)
that would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
3. For purposes of this Section 6.05(F), Vested account
balance shall mean, in the case of a money purchase
pension plan or a target benefit plan, the Participant's
separate account balance attributable solely to
accumulated deductible employee contributions within the
meaning of Section 72(o)(5)(B) of the Code. In the case
of a profit sharing plan, Vested account balance shall
have the same meaning as provided in Section 6.05(D)(7).
G. TRANSITIONAL RULES
1. Any living Participant not receiving benefits on August
23, 1984, who would otherwise not receive the benefits
prescribed by the previous subsections of this Section
6.05 must be given the opportunity to elect to have the
prior subsections of this Section apply if such
Participant is credited with at least one Hour of Service
under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such
Participant had at least 10 Years of Vesting Service when
he or she separated from service.
2. Any living Participant not receiving benefits on August
23, 1984, who was credited with at least one Hour of
Service under this Plan or a predecessor plan on or after
September 2, 1974, and who is not otherwise credited with
any service in a Plan Year beginning on or after January
1, 1976, must be given the opportunity to have his or her
benefits paid in accordance with Section 6.05(G)(4).
3. The respective opportunities to elect (as described in
Section 6.05(G)(1) and (2) above) must be afforded to the
appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
<PAGE>
22
4. Any Participant who has elected pursuant to Section
6.05(G)(2) and any Participant who does not elect under
Section 6.05(G)(1) or who meets the requirements of
Section 6.05(G)(1) except that such Participant does not
have at least 10 Years of Vesting Service when he or she
separates from service, shall have his or her benefits
distributed in accordance with all of the following
requirements if benefits would have been payable in the
form of a life annuity:
a. Automatic Joint and Survivor Annuity - If benefits in
the form of a life annuity become payable to a
married Participant who:
(1) begins to receive payments under the Plan on or
after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while
still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after attaining
Normal Retirement Age (or the qualified early
retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this
Plan in the form of a qualified joint and
survivor annuity, unless the Participant has
elected otherwise during the election period.
The election period must begin at least 6 months
before the Participant attains qualified early
retirement age and ends not more than 90 days
before the commencement of benefits. Any
election hereunder will be in writing and may be
changed by the Participant at any time.
b. Election of Early Survivor Annuity - A Participant
who is employed after attaining the qualified early
retirement age will be given the opportunity to
elect, during the election period, to have a survivor
annuity payable on death. If the Participant elects
the survivor annuity, payments under such annuity
must not be less than the payments which would have
been made to the spouse under the qualified joint and
survivor annuity if the Participant had retired on
the day before his or her death. Any election under
this provision will be in writing and may be changed
by the Participant at any time. The election period
begins on the later of (1) the 90th day before the
Participant attains the qualified early retirement
age, or (2) the date on which participation begins,
and ends on the date the Participant terminates
employment.
c. For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is the latest of:
a. the earliest date, under the Plan, on which
the Participant may elect to receive
retirement benefits,
b. the first day of the 120th month beginning
before the Participant reaches Normal
Retirement Age, or
c. the date the Participant begins
participation.
2. Qualified joint and survivor annuity is an
annuity for the life of the Participant with a
survivor annuity for the life of the spouse as
described in Section 6.05(D)(4) of this Plan.
6.06 DISTRIBUTION REQUIREMENTS
A. GENERAL RULES
1. Subject to Section 6.05 Joint and Survivor Annuity
Requirements, the requirements of this Section shall
apply to any distribution of a Participant's interest and
will take precedence over any inconsistent provisions of
this Plan. Unless otherwise specified, the provisions of
this Section 6.06 apply to calendar years beginning after
December 31, 1984.
2. All distributions required under this Section 6.06 shall
be determined and made in accordance with the Income Tax
Regulations under Section 401(a)(9), including the
minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
B. REQUIRED BEGINNING DATE - The entire interest of a
Participant must be distributed or begin to be distributed no
later than the Participant's required beginning date.
C. LIMITS ON DISTRIBUTION PERIODS - As of the first distribution
calendar year, distributions, if not made in a single sum,
may only be made over one of the following periods (or a
combination thereof):
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the life expectancy
of the Participant, or
4. a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
D. DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR - If the
Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall
apply on or after the required beginning date:
1. Individual Account
a. If a Participant's benefit is to be distributed over
(1) a period not extending beyond the life expectancy
of the Participant or the joint life and last
survivor expectancy of the Participant and the
Participant's designated Beneficiary or (2) a period
not extending beyond the life expectancy of the
designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with
distributions for the first distribution calendar
year, must at least equal the quotient obtained by
dividing the Participant's benefit by the applicable
life expectancy.
b. For calendar years beginning before January 1, 1989,
if the Participant's spouse is not the designated
Beneficiary, the method of distribution selected must
assure that at least 50% of the present value of the
amount available for distribution is paid within the
life expectancy of the Participant.
c. For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning
with distributions for the first distribution
calendar year shall not be less than the quotient
obtained by dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy or (2)
if the Participant's spouse is not the
<PAGE>
23
designated Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of
Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Distributions after the death of the
Participant shall be distributed using the applicable
life expectancy in Section 6.05(D)(1)(a) above as the
relevant divisor without regard to proposed
regulations 1.401(a)(9)-2.
d. The minimum distribution required for the
Participant's first distribution calendar year must
be made on or before the Participant's required
beginning date. The minimum distribution for other
calendar years, including the minimum distribution
for the distribution calendar year in which the
Employee's required beginning date occurs, must be
made on or before December 31 of that distribution
calendar year.
2. Other Forms - If the Participant's benefit is distributed
in the form of an annuity purchased from an insurance
company, distributions thereunder shall be made in
accordance with the requirements of Section 401(a)(9) of
the Code and the regulations thereunder.
E. DEATH DISTRIBUTION PROVISIONS
1. Distribution Beginning Before Death - If the Participant
dies after distribution of his or her interest has begun,
the remaining portion of such interest will continue to
be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
2. Distribution Beginning After Death - If the Participant
dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall
be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's
death except to the extent that an election is made to
receive distributions in accordance with (a) or (b)
below:
a. if any portion of the Participant's interest is
payable to a designated Beneficiary, distributions
may be made over the life or over a period certain
not greater than the life expectancy of the
designated Beneficiary commencing on or before
December 31 of the calendar year immediately
following the calendar year in which the Participant
died;
b. if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required
to begin in accordance with (a) above shall not be
earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year
in which the Participant dies or (2) December 31 of
the calendar year in which the Participant would have
attained age 70 1/2.
If the Participant has not made an election pursuant
to this Section 6.05(E)(2) by the time of his or her
death, the Participant's designated Beneficiary must
elect the method of distribution no later than the
earlier of (1) December 31 of the calendar year in
which distributions would be required to begin under
this Section 6.05(E)(2), or (2) December 31 of the
calendar year which contains the fifth anniversary of
the date of death of the Participant. If the
Participant has no designated Beneficiary, or if the
designated Beneficiary does not elect a method of
distribution, distribution of the Participant's
entire interest must be completed by December 31 of
the calendar year containing the fifth anniversary of
the Participant's death.
3. For purposes of Section 6.06(E)(2) above, if the
surviving spouse dies after the Participant, but before
payments to such spouse begin, the provisions of Section
6.06(E)(2), with the exception of paragraph (b) therein,
shall be applied as if the surviving spouse were the
Participant.
4. For purposes of this Section 6.06(E), any amount paid to
a child of the Participant will be treated as if it had
been paid to the surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches
the age of majority.
5. For purposes of this Section 6.06(E), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section
6.06(E)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to
Section 6.06(E)(2) above). If distribution in the form
of an annuity irrevocably commences to the Participant
before the required beginning date, the date distribution
is considered to begin is the date distribution actually
commences.
F. DEFINITIONS
1. Applicable Life Expectancy - The life expectancy (or
joint and last survivor expectancy) calculated using the
attained age of the Participant (or designated
Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year which has elapsed
since the date life expectancy was first calculated. If
life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the
first distribution calendar year, and if life expectancy
is being recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is designated
as the Beneficiary under the Plan in accordance with
Section 401(a)(9) of the Code and the regulations
thereunder.
3. Distribution Calendar Year - A calendar year for which a
minimum distribution is required. For distributions
beginning before the Participant's death, the first
distribution calendar year is the calendar year
immediately preceding the calendar year which contains
the Participant's required beginning date. For
distributions beginning after the Participant's death,
the first distribution calendar year is the calendar year
in which distributions are required to begin pursuant to
Section 6.05(E) above.
4. Life Expectancy - Life expectancy and joint and last
survivor expectancy are computed by use of the expected
return multiples in Tables V and VI of Section 1.72-9 of
the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse,
in the case of distributions described in Section
6.05(E)(2)(b) above) by the time distributions are
required to begin, life expectancies shall be
recalculated annually. Such election shall be
irrevocable as to the Participant (or spouse) and shall
apply to all subsequent years. The life expectancy of a
nonspouse Beneficiary may not be recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation date in
the valuation calendar year (the calendar year
immediately preceding the distribution calendar year)
increased by the amount of any Contributions or
Forfeitures allocated to the account balance as of
dates in the valuation calendar year after the
valuation date and decreased by distributions made in
the valuation calendar year after the valuation date.
<PAGE>
24
b. Exception for second distribution calendar year. For
purposes of paragraph (a) above, if any portion of
the minimum distribution for the first distribution
calendar year is made in the second distribution
calendar year on or before the required beginning
date, the amount of the minimum distribution made in
the second distribution calendar year shall be
treated as if it had been made in the immediately
preceding distribution calendar year.
6. Required Beginning Date
a. General Rule - The required beginning date of a
Participant is the first day of April of the calendar
year following the calendar year in which the
Participant attains age 70 1/2.
b. Transitional Rules - The required beginning date of a
Participant who attains age 70 1/2 before January 1,
1988, shall be determined in accordance with (1) or
(2) below:
(1) Non 5% Owners - The required beginning date of a
Participant who is not a 5% owner is the first
day of April of the calendar year following the
calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
(2) 5% Owners - The required beginning date of a
Participant who is a 5% owner during any year
beginning after December 31, 1979, is the first
day of April following the later of:
(a) the calendar year in which the Participant
attains age 70 1/2, or
(b) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a 5% owner, or the
calendar year in which the Participant
retires.
The required beginning date of a Participant
who is not a 5% owner who attains age 70 1/2
during 1988 and who has not retired as of
January 1, 1989, is April 1, 1990.
c. 5% Owner - A Participant is treated as a 5% owner
for purposes of this Section 6.06(F)(6) if such
Participant is a 5% owner as defined in Section
416(i) of the Code (determined in accordance with
Section 416 but without regard to whether the Plan is
top-heavy) at any time during the Plan Year ending
with or within the calendar year in which such owner
attains age 66 1/2 or any subsequent Plan Year.
d. Once distributions have begun to a 5% owner under
this Section 6.06(F)(6) they must continue to be
distributed, even if the Participant ceases to be a
5% owner in a subsequent year.
G. TRANSITIONAL RULE
1. Notwithstanding the other requirements of this Section
6.06 and subject to the requirements of Section 6.05,
Joint and Survivor Annuity Requirements, distribution on
behalf of any Employee, including a 5% owner, may be made
in accordance with all of the following requirements
(regardless of when such distribution commences):
a. The distribution by the Fund is one which would not
have qualified such Fund under Section 401(a)(9) of
the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
b. The distribution is in accordance with a method of
distribution designated by the Employee whose
interest in the Fund is being distributed or, if the
Employee is deceased, by a Beneficiary of such
Employee.
c. Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before
January 1, 1984.
d. The Employee had accrued a benefit under the Plan as
of December 31, 1983.
e. The method of distribution designated by the Employee
or the Beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of
priority.
2. A distribution upon death will not be covered by this
transitional rule unless the information in the
designation contains the required information described
above with respect to the distributions to be made upon
the death of the Employee.
3. For any distribution which commences before January 1,
1984, but continues after December 31, 1983, the
Employee, or the Beneficiary, to whom such distribution
is being made, will be presumed to have designated the
method of distribution under which the distribution is
being made if the method of distribution was specified in
writing and the distribution satisfies the requirements
in Sections 6.06(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of the
Code and the regulations thereunder. If a designation is
revoked subsequent to the date distributions are required
to begin, the Plan must distribute by the end of the
calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed
which would have been required to have been distributed
to satisfy Section 401(a)(9) of the Code and the
regulations thereunder, but for the Section 242(b)(2)
election. For calendar years beginning after December
31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Any changes in the designation will be considered to be a
revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not
be considered to be a revocation of the designation, so
long as such substitution or addition does not alter the
period over which distributions are to be made under the
designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one
plan to another plan, the rules in Q&A J-2 and Q&A J-3
shall apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or
required by this Section 6) must be nontransferable. The terms
of any annuity contract purchased and distributed by the Plan to
a Participant or spouse shall comply with the requirements of the
Plan.
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive
a loan from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a
reasonably equivalent basis.
B. Loans shall not be made available to Highly Compensated
Employees (as defined in Section 414(q) of the Code) in an
amount greater than the amount made available to other
Employees.
<PAGE>
25
C. Loans must be adequately secured and bear a reasonable
interest rate.
D. No Participant loan shall exceed the present value of the
Vested portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse,
if any, to the use of the Individual Account as security for
the loan. Spousal consent shall be obtained no earlier than
the beginning of the 90 day period that ends on the date on
which the loan is to be so secured. The consent must be in
writing, must acknowledge the effect of the loan, and must be
witnessed by a plan representative or notary public. Such
consent shall thereafter be binding with respect to the
consenting spouse or any subsequent spouse with respect to
that loan. A new consent shall be required if the account
balance is used for renegotiation, extension, renewal, or
other revision of the loan. Notwithstanding the foregoing,
no spousal consent is necessary if, at the time the loan is
secured, no consent would be required for a distribution
under Section 417(a)(2)(B). In addition, spousal consent is
not required if the Plan or the Participant is not subject to
Section 401(a)(11) at the time the Individual Account is used
as security, or if the total Individual Account subject to
the security is less than or equal to $3,500.
F. In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable
event occurs in the Plan. Notwithstanding the preceding
sentence, a Participant's default on a loan will be treated
as a distributable event and as soon as administratively
feasible after the default, the Participant's Vested
Individual Account will be reduced by the lesser of the
amount in default (plus accrued interest) or the amount
secured. If this Plan is a 401(k) plan, then to the extent
the loan is attributable to a Participant's Elective
Deferrals, Qualified Nonelective Contributions or Qualified
Matching Contributions, the Participant's Individual Account
will not be reduced unless the Participant has attained age
59 1/2 or has another distributable event. A Participant
will be deemed to have consented to the provision at the time
the loan is made to the Participant.
G. No loans will be made to any shareholder-employee or Owner-
Employee. For purposes of this requirement, a shareholder-
employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of Section 318(a)(1)
of the Code), on any day during the taxable year of such
corporation, more than 5% of the outstanding stock of the
corporation.
If a valid spousal consent has been obtained in accordance
with 6.08(E), then, notwithstanding any other provisions of
this Plan, the portion of the Participant's Vested Individual
Account used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of
the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment
of the loan. If less than 100% of the Participant's Vested
Individual Account (determined without regard to the
preceding sentence) is payable to the surviving spouse, then
the account balance shall be adjusted by first reducing the
Vested Individual Account by the amount of the security used
as repayment of the loan, and then determining the benefit
payable to the surviving spouse.
To avoid taxation to the Participant, no loan to any
Participant can be made to the extent that such loan when
added to the outstanding balance of all other loans to the
Participant would exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of
loans during the one year period ending on the day before the
loan is made, over the outstanding balance of loans from the
Plan on the date the loan is made, or (b) 50% of the present
value of the nonforfeitable Individual Account of the
Participant or, if greater, the total Individual Account up
to $10,000. For the purpose of the above limitation, all
loans from all plans of the Employer and other members of a
group of employers described in Sections 414(b), 414(c), and
414(m) of the Code are aggregated. Furthermore, any loan
shall by its terms require that repayment (principal and
interest) be amortized in level payments, not less frequently
than quarterly, over a period not extending beyond 5 years
from the date of the loan, unless such loan is used to
acquire a dwelling unit which within a reasonable time
(determined at the time the loan is made) will be used as the
principal residence of the Participant. An assignment or
pledge of any portion of the Participant's interest in the
Plan and a loan, pledge, or assignment with respect to any
insurance contract purchased under the Plan, will be treated
as a loan under this paragraph.
The Plan Administrator shall administer the loan program in
accordance with a written document. Such written document
shall include, at a minimum, the following: (i) the identity
of the person or positions authorized to administer the
Participant loan program; (ii) the procedure for applying for
loans; (iii) the basis on which loans will be approved or
denied; (iv) limitations (if any) on the types and amounts of
loans offered; (v) the procedure under the program for
determining a reasonable rate of interest; (vi) the types of
collateral which may secure a Participant loan; and (vii) the
events constituting default and the steps that will be taken
to preserve Plan assets in the event of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this Plan
to be made either in a form actually held in the Fund, or in cash
by converting assets other than cash into cash, or in any
combination of the two foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. Direct Rollover Option
This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect, at the
time and in the manner prescribed by the Plan Administrator,
to have any portion of an eligible rollover distribution that
is equal to at least $500 paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
B. Definitions
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that
an eligible rollover distribution does not include:
a. any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a
specified period of ten years or more;
b. any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code;
c. the portion of any other distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities); and
d. any other distribution(s) that is reasonably expected
to total less than $200 during a year.
2. Eligible retirement plan - An eligible retirement plan is
an individual retirement account described in Section
408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan
described in Section
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26
403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
3. Distributee - A distributee includes an Employee or
former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former
spouse.
4. Direct rollover - A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
6.11 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES
The Plan Administrator must use all reasonable measures to locate
Participants or Beneficiaries who are entitled to distributions
from the Plan. In the event that the Plan Administrator cannot
locate a Participant or Beneficiary who is entitled to a
distribution from the Plan after using all reasonable measures to
locate him or her, the Plan Administrator may, consistent with
applicable laws, regulations and other pronouncements under
ERISA, use any reasonable procedure to dispose of distributable
plan assets, including any of the following: (1) establish a
bank account for and in the name of the Participant or
Beneficiary and transfer the assets to such bank account, (2)
purchase an annuity contract with the assets in the name of the
Participant or Beneficiary, or (3) after the expiration of 5
years after the benefit becomes payable, treat the amount
distributable as a Forfeiture and allocate it in accordance with
the terms of the Plan and if the Participant or Beneficiary is
later located, restore such benefit to the Plan.
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the
Vested portion of the Participant's Individual Account shall file
a written request with the Plan Administrator on a form to be
furnished to him or her by the Plan Administrator for such
purpose. The request shall set forth the basis of the claim.
The Plan Administrator is authorized to conduct such examinations
as may be necessary to facilitate the payment of any benefits to
which the Participant or Beneficiary may be entitled under the
terms of the Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or
Beneficiary has been wholly or partially denied, the Plan
Administrator must furnish such Participant or Beneficiary
written notice of the denial within 60 days of the date the
original claim was filed. This notice shall set forth the
specific reasons for the denial, specific reference to pertinent
Plan provisions on which the denial is based, a description of
any additional information or material needed to perfect the
claim, an explanation of why such additional information or
material is necessary and an explanation of the procedures for
appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review
by the Plan Administrator. The Participant or Beneficiary may
request that the review be in the nature of a hearing. The
Participant or Beneficiary shall have the right to
representation, to review pertinent documents and to submit
comments in writing. The Plan Administrator shall issue a
decision on such review within 60 days after receipt of an
application for review as provided for in Section 7.02. Upon a
decision unfavorable to the Participant or Beneficiary, such
Participant or Beneficiary shall be entitled to bring such
actions in law or equity as may be necessary or appropriate to
protect or clarify his or her right to benefits under this Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the
managing body of the Employer designates a person or persons
other than the Employer as the Plan Administrator and so
notifies the Trustee (or Custodian, if applicable). The
Employer shall also be the Plan Administrator if the person
or persons so designated cease to be the Plan Administrator.
The Employer may establish an administrative committee that
will carry out the Plan Administrator's duties. Members of
the administrative committee may allocate the Plan
Administrator's duties among themselves.
B. If the managing body of the Employer designates a person or
persons other than the Employer as Plan Administrator, such
person or persons shall serve at the pleasure of the Employer
and shall serve pursuant to such procedures as such managing
body may provide. Each such person shall be bonded as may be
required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the
duties of the Plan Administrator among several individuals or
entities. Such appointments shall not be effective until the
party designated accepts such appointment in writing.
B. The Plan Administrator shall have the authority to control
and manage the operation and administration of the Plan. The
Plan Administrator shall administer the Plan for the
exclusive benefit of the Participants and their Beneficiaries
in accordance with the specific terms of the Plan.
C. The Plan Administrator shall be charged with the duties of
the general administration of the Plan, including, but not
limited to, the following:
1. To determine all questions of interpretation or policy in
a manner consistent with the Plan's documents and the
Plan Administrator's construction or determination in
good faith shall be conclusive and binding on all persons
except as otherwise provided herein or by law. Any
interpretation or construction shall be done in a
nondiscriminatory manner and shall be consistent with the
intent that the Plan shall continue to be deemed a
qualified plan under the terms of Section 401(a) of the
Code, as amended from time-to-time, and shall comply with
the terms of ERISA, as amended from time-to-time;
2. To determine all questions relating to the eligibility of
Employees to become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary shall be entitled under the
Plan and to direct the Trustee (or Custodian, if
applicable) with respect to all disbursements under the
Plan, and, when requested by
<PAGE>
27
the Trustee (or Custodian), to furnish the Trustee (or
Custodian) with instructions, in writing, on matters
pertaining to the Plan and the Trustee (or Custodian) may
rely and act thereon;
5. To maintain all records necessary for the administration
of the Plan;
6. To be responsible for preparing and filing such
disclosure and tax forms as may be required from time-to-
time by the Secretary of Labor or the Secretary of the
Treasury; and
7. To furnish each Employee, Participant or Beneficiary such
notices, information and reports under such circumstances
as may be required by law.
D. The Plan Administrator shall have all of the powers necessary
or appropriate to accomplish his or her duties under the
Plan, including, but not limited to, the following:
1. To appoint and retain such persons as may be necessary to
carry out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other
persons as the Plan Administrator deems necessary or
advisable in the administration of the Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules
which it deems necessary to carry out the terms of the
Plan;
5. To make any adjustments in a uniform and
nondiscriminatory manner which it deems necessary to
correct any arithmetical or accounting errors which may
have been made for any Plan Year; and
6. To correct any defect, supply any omission or reconcile
any inconsistency in such manner and to such extent as
shall be deemed necessary or advisable to carry out the
purpose of the Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not
limited to, those involved in retaining necessary professional
assistance may be paid from the assets of the Fund.
Alternatively, the Employer may, in its discretion, pay any or
all such expenses. Pursuant to uniform and nondiscriminatory
rules that the Plan Administrator may establish from time-to-
time, administrative expenses and expenses unique to a particular
Participant may be charged to a Participant's Individual Account
or the Plan Administrator may allow Participants to pay such fees
outside of the Plan. The Employer shall furnish the Plan
Administrator with such clerical and other assistance as the Plan
Administrator may need in the performance of his or her duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his or her duties,
the Employer shall supply full and timely information to the Plan
Administrator (or his or her designated agents) on all matters
relating to the Compensation of all Participants, their regular
employment, retirement, death, Disability or Termination of
Employment, and such other pertinent facts as the Plan
Administrator (or his or her agents) may require. The Plan
Administrator shall advise the Trustee (or Custodian, if
applicable) of such of the foregoing facts as may be pertinent to
the Trustee's (or Custodian's) duties under the Plan. The Plan
Administrator (or his or her agents) is entitled to rely on such
information as is supplied by the Employer and shall have no duty
or responsibility to verify such information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates to
the Prototype Sponsor the power, but not the duty, to amend
the Plan without any further action or consent of the
Employer as the Prototype Sponsor deems necessary for the
purpose of adjusting the Plan to comply with all laws and
regulations governing pension or profit sharing plans.
Specifically, it is understood that the amendments may be
made unilaterally by the Prototype Sponsor. However, it
shall be understood that the Prototype Sponsor shall be
under no obligation to amend the Plan documents and the
Employer expressly waives any rights or claims against the
Prototype Sponsor for not exercising this power to amend.
For purposes of Prototype Sponsor amendments, the mass
submitter shall be recognized as the agent of the Prototype
Sponsor. If the Prototype Sponsor does not adopt the
amendments made by the mass submitter, it will no longer be
identical to or a minor modifier of the mass submitter plan.
B. An amendment by the Prototype Sponsor shall be accomplished
by giving written notice to the Employer of the amendment to
be made. The notice shall set forth the text of such
amendment and the date such amendment is to be effective.
Such amendment shall take effect unless within the 30 day
period after such notice is provided, or within such shorter
period as the notice may specify, the Employer gives the
Prototype Sponsor written notice of refusal to consent to the
amendment. Such written notice of refusal shall have the
effect of withdrawing the Plan as a prototype plan and shall
cause the Plan to be considered an individually designed
plan. The right of the Prototype Sponsor to cause the Plan
to be amended shall terminate should the Plan cease to
conform as a prototype plan as provided in this or any other
section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the Adoption
Agreement; (2) add overriding language in the Adoption Agreement
when such language is necessary to satisfy Section 415 or Section
416 of the Code because of the required aggregation of multiple
plans; and (3) add certain model amendments published by the
Internal Revenue Service which specifically provide that their
adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement under
Section 412(d) of the Code, will no longer participate in this
prototype plan and will be considered to have an individually
designed plan.
An Employer who wishes to amend the Plan to change the options it
has chosen in the Adoption Agreement must complete and deliver a
new Adoption Agreement to the Prototype Sponsor and Trustee (or
Custodian, if applicable). Such amendment shall become effective
upon execution by the Employer and Trustee (or Custodian).
The Employer further reserves the right to replace the Plan in
its entirety by adopting another retirement plan which the
Employer designates as a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's
Individual Account may be reduced to the extent permitted under
<PAGE>
28
Section 412(c)(8) of the Code. For purposes of this paragraph, a
plan amendment which has the effect of decreasing a Participant's
Individual Account or eliminating an optional form of benefit
with respect to benefits attributable to service before the
amendment shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a Plan is amended, in the
case of an Employee who is a Participant as of the later of the
date such amendment is adopted or the date it becomes effective,
the Vested percentage (determined as of such date) of such
Employee's Individual Account derived from Employer Contributions
will not be less than the percentage computed under the Plan
without regard to such amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended
in any way that directly or indirectly affects the computation of
the Participant's Vested percentage, or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting
schedule, each Participant with at least 3 Years of Vesting
Service with the Employer may elect, within the time set forth
below, to have the Vested percentage computed under the Plan
without regard to such amendment.
For Participants who do not have at least 1 Hour of Service in
any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "5 Years of Vesting
Service" for "3 Years of Vesting Service" where such language
appears.
The Period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and
shall end the later of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions thereto indefinitely, but such continuance and
payment is not assumed as a contractual obligation. Neither the
Adoption Agreement nor the Plan nor any amendment or modification
thereof nor the making of contributions hereunder shall be
construed as giving any Participant or any person whomsoever any
legal or equitable right against the Employer, the Trustee (or
Custodian, if applicable) the Plan Administrator or the Prototype
Sponsor except as specifically provided herein, or as provided by
law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by
appropriate action of its managing body. Such termination shall
be effective on the date specified by the Employer. The Plan
shall terminate if the Employer shall be dissolved, terminated,
or declared bankrupt. Written notice of the termination and
effective date thereof shall be given to the Trustee (or
Custodian), Plan Administrator, Prototype Sponsor, Participants
and Beneficiaries of deceased Participants, and the required
filings (such as the Form 5500 series and others) must be made
with the Internal Revenue Service and any other regulatory body
as required by current laws and regulations. Until all of the
assets have been distributed from the Fund, the Employer must
keep the Plan in compliance with current laws and regulations by
(a) making appropriate amendments to the Plan and (b) taking such
other measures as may be required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the
Employer may continue the Plan and be substituted in the place of
the present Employer. The successor and the present Employer
(or, if deceased, the executor of the estate of a deceased Self-
Employed Individual who was the Employer) must execute a written
instrument authorizing such substitution and the successor must
complete and sign a new plan document.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan will
no longer be considered to be part of a prototype plan, and such
Employer can no longer participate under this prototype. In such
event, the Plan will be considered an individually designed plan.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without
regard to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they
shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and whenever any
words are used herein in the singular form they shall be
construed as though they were also used in the plural form in all
cases where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or
transfer of assets or liabilities of such Plan to, any other
plan, each Participant shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer (if the
Plan had then terminated) which are equal to or greater than the
benefits he or she would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the
Plan had then terminated). The Trustee (or Custodian) has the
authority to enter into merger agreements or agreements to
directly transfer the assets of this Plan but only if such
agreements are made with trustees or custodians of other
retirement plans described in Section 401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other fiduciary
under this Plan shall discharge their duties with respect to this
Plan solely in the interests of Participants and their
Beneficiaries and with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting
in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
No fiduciary shall cause the Plan to engage in any transaction
known as a "prohibited transaction" under ERISA.
<PAGE>
29
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest
whatsoever hereunder agree to perform any and all acts and
execute any and all documents and papers which may be necessary
or desirable for the carrying out of this Plan and any of its
provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns, as those terms shall
apply to any and all parties hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this
Plan is a Top-Heavy Plan if any of the following conditions
exist:
1. If the top-heavy ratio for this Plan exceeds 60% and this
Plan is not part of any required aggregation group or
permissive aggregation group of plans.
2. If this Plan is part of a required aggregation group of
plans but not part of a permissive aggregation group and
the top-heavy ratio for the group of plans exceeds 60%.
3. If this Plan is a part of a required aggregation group
and part of a permissive aggregation group of plans and
the top-heavy ratio for the permissive aggregation group
exceeds 60%.
For purposes of this Section 10.08, the following terms
shall have the meanings indicated below:
B. KEY EMPLOYEE - Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner
(or considered an owner under Section 318 of the Code) of one
of the 10 largest interests in the Employer if such
individual's compensation exceeds 100% of the dollar
limitation under Section 415(c)(1)(A) of the Code, a 5% owner
of the Employer, or a 1% owner of the Employer who has an
annual compensation of more than $150,000. Annual
compensation means compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by
the Employer pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Section
125, Section 402(e)(3), Section 402(h)(1)(B) or Section
403(b) of the Code. The determination period is the Plan
Year containing the determination date and the 4 preceding
Plan Years.
The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
C. TOP-HEAVY RATIO
1. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had
accrued benefits, the top-heavy ratio for this Plan alone
or for the required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the
sum of the account balances of all Key Employees as of
the determination date(s) (including any part of any
account balance distributed in the 5-year period ending
on the determination date(s)), and the denominator of
which is the sum of all account balances (including any
part of any account balance distributed in the 5-year
period ending on the determination date(s)), both
computed in accordance with Section 416 of the Code and
the regulations thereunder. Both the numerator and the
denominator of the top-heavy ratio are increased to
reflect any contribution not actually made as of the
determination date, but which is required to be taken
into account on that date under Section 416 of the Code
and the regulations thereunder.
2. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer maintains or has
maintained one or more defined benefit plans which during
the 5-year period ending on the determination date(s) has
or has had any accrued benefits, the top-heavy ratio for
any required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the
sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees,
determined in accordance with (1) above, and the present
value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the
determination date(s), and the denominator of which is
the sum of the account balances under the aggregated
defined contribution plan or plans for all Participants,
determined in accordance with (1) above, and the present
value of accrued benefits under the defined benefit plan
or plans for all Participants as of the determination
date(s), all determined in accordance with Section 416 of
the Code and the regulations thereunder. The accrued
benefits under a defined benefit plan in both the
numerator and denominator of the top-heavy ratio are
increased for any distribution of an accrued benefit made
in the 5-year period ending on the determination date.
3. For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will
be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on
the determination date, except as provided in Section 416
of the Code and the regulations thereunder for the first
and second plan years of a defined benefit plan. The
account balances and accrued benefits of a Participant
(a) who is not a Key Employee but who was a Key Employee
in a Prior Year, or (b) who has not been credited with at
least one Hour of Service with any employer maintaining
the plan at any time during the 5-year period ending on
the determination date will be disregarded. The
calculation of the top-heavy ratio, and the extent to
which distributions, rollovers, and transfers are taken
into account will be made in accordance with Section 416
of the Code and the regulations thereunder. Deductible
employee contributions will not be taken into account for
purposes of computing the top-heavy ratio. When
aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar
year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under
all defined benefit plans maintained by the Employer, or
(b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section
411(b)(1)(C) of the Code.
4. Permissive aggregation group: The required aggregation
group of plans plus any other plan or plans of the
Employer which, when considered as a group with the
required aggregation group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
<PAGE>
30
5. Required aggregation group: (a) Each qualified plan of
the Employer in which at least one Key Employee
participates or participated at any time during the
determination period (regardless of whether the Plan has
terminated), and (b) any other qualified plan of the
Employer which enables a plan described in (a) to meet
the requirements of Sections 401(a)(4) or 410 of the
Code.
6. Determination date: For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year.
For the first Plan Year of the Plan, the last day of that
year.
7. Valuation date: For purposes of calculating the top-
heavy ratio, the valuation date shall be the last day of
each Plan Year.
8. Present value: For purposes of establishing the "present
value" of benefits under a defined benefit plan to
compute the top-heavy ratio, any benefit shall be
discounted only for mortality and interest based on the
interest rate and mortality table specified for this
purpose in the defined benefit plan, unless otherwise
indicated in the Adoption Agreement.
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan
is established and one or more other trades or businesses, this
Plan and the plan established for other trades or businesses
must, when looked at as a single plan, satisfy Sections 401(a)
and (d) of the Code for the employees of those trades or
businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must
be included in a plan which satisfies Sections 401(a) and (d) of
the Code and which provides contributions and benefits not less
favorable than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and
the individual controls a trade or business, then the
contributions or benefits of the employees under the plan of the
trade or business which is controlled must be as favorable as
those provided for him or her under the most favorable plan of
the trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or
two or more Owner-Employees, will be considered to control a
trade or business if the Owner-Employee, or two or more Owner-
Employees, together:
A. own the entire interest in a unincorporated trade or
business, or
B. in the case of a partnership, own more than 50% of either the
capital interest or the profit interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two
or more Owner-Employees, shall be treated as owning any interest
in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-
Employees, are considered to control within the meaning of the
preceding sentence.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily.
The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic
relations order, as defined in Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified
domestic relations order until January 1, 1985. However, in the
case of a domestic relations order entered before such date, the
Plan Administrator:
(1) shall treat such order as a qualified domestic relations
order if such Plan Administrator is paying benefits pursuant
to such order on such date, and
(2) may treat any other such order entered before such date as a
qualified domestic relations order even if such order does
not meet the requirements of Section 414(p) of the Code.
Notwithstanding any provision of the Plan to the contrary, a
distribution to an alternate payee under a qualified domestic
relations order shall be permitted even if the Participant
affected by such order is not otherwise entitled to a
distribution and even if such Participant has not attained
earliest retirement age as defined in Section 414(p) of the Code.
10.11 CANNOT ELIMINATE PROTECTED BENEFITS
Pursuant to Section 411(d)(6) of the Code, and the regulations
thereunder, the Employer cannot reduce, eliminate or make subject
to Employer discretion any Section 411(d)(6) protected benefit.
Where this Plan document is being adopted to amend another plan
that contains a protected benefit not provided for in this
document, the Employer may attach a supplement to the Adoption
Agreement that describes such protected benefit which shall
become part of the Plan.
SECTION ELEVEN 401(k) PROVISIONS
In addition to Sections 1 through 10, the provisions of this
Section 11 shall apply if the Employer has established a 401(k)
cash or deferred arrangement (CODA) by completing and signing the
appropriate Adoption Agreement.
11.100 DEFINITIONS
The following words and phrases when used in the Plan with
initial capital letters shall, for the purposes of this Plan,
have the meanings set forth below unless the context indicates
that other meanings are intended.
11.101 ACTUAL DEFERRAL PERCENTAGE (ADP)
Means, for a specified group of Participants for a Plan Year, the
average of the ratios (calculated separately for each Participant
in such group) of (1) the amount of Employer Contributions
actually paid over to the Fund on behalf of such Participant for
the Plan Year to (2) the Participant's Compensation for such Plan
Year (taking into account only that Compensation paid to the
Employee during the portion of the Plan Year he or she was an
eligible Participant, unless otherwise indicated in the Adoption
Agreement). For purposes of calculating the ADP, Employer
Contributions on behalf of any Participant shall include: (1) any
Elective Deferrals made pursuant to the Participant's deferral
election, (including Excess Elective Deferrals of Highly
Compensated Employees), but excluding (a) Excess Elective
Deferrals of Non-highly Compensated Employees that arise solely
from Elective Deferrals made under the Plan or plans of this
Employer and (b) Elective Deferrals that are taken into account
in the Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Elective
<PAGE>
31
Deferrals); and (2) at the election of the Employer, Qualified
Nonelective Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an
Employee who would be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
11.102 AGGREGATE LIMIT
Means the sum of (1) 125% of the greater of the ADP of the
Participants who are not Highly Compensated Employees for the
Plan Year or the ACP of the Participants who are not Highly
Compensated Employees under the Plan subject to Code Section
401(m) for the Plan Year beginning with or within the Plan Year
of the CODA; and (2) the lesser of 200% or two plus the lesser of
such ADP or ACP. "Lesser" is substituted for "greater" in "(1)"
above, and "greater" is substituted for "lesser" after "two plus
the" in "(2)" if it would result in a larger Aggregate Limit.
11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means the average of the Contribution Percentages of the Eligible
Participants in a group.
11.104 CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing
Participant pursuant to Section 11.201 and on whose behalf the
Employer is contributing Elective Deferrals to the Plan (or is
making Nondeductible Employee Contributions).
11.105 CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the Participant's
Contribution Percentage Amounts to the Participant's Compensation
for the Plan Year (taking into account only the Compensation paid
to the Employee during the portion of the Plan Year he or she was
an eligible Participant, unless otherwise indicated in the
Adoption Agreement).
11.106 CONTRIBUTION PERCENTAGE AMOUNTS
Means the sum of the Nondeductible Employee Contributions,
Matching Contributions, and Qualified Matching Contributions made
under the Plan on behalf of the Participant for the Plan Year.
Such Contribution Percentage Amounts shall not include Matching
Contributions that are forfeited either to correct Excess
Aggregate Contributions or because the contributions to which
they relate are Excess Deferrals, Excess Contributions, Excess
Aggregate Contributions or excess annual additions which are
distributed pursuant to Section 11.508. If so elected in the
Adoption Agreement, the Employer may include Qualified
Nonelective Contributions in the Contribution Percentage Amount.
The Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is met
before the Elective Deferrals are used in the ACP test and
continues to be met following the exclusion of those Elective
Deferrals that are used to meet the ACP test.
11.107 ELECTIVE DEFERRALS
Means any Employer Contributions made to the Plan at the election
of the Participant, in lieu of cash compensation, and shall
include contributions made pursuant to a salary reduction
agreement or other deferral mechanism. With respect to any
taxable year, a Participant's Elective Deferral is the sum of all
Employer contributions made on behalf of such Participant
pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement as described in Section
402(h)(1)(B), any eligible deferred compensation plan under
Section 457, any plan as described under Section 501(c)(18), and
any Employer contributions made on the behalf of a Participant
for the purchase of an annuity contract under Section 403(b)
pursuant to a salary reduction agreement. Elective Deferrals
shall not include any deferrals properly distributed as excess
annual additions.
No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other qualified plan maintained by the
Employer, during any taxable year, in excess of the dollar
limitation contained in Section 402(g) of the Code in effect at
the beginning of such taxable year.
Elective Deferrals may not be taken into account for purposes of
satisfying the minimum allocation requirement applicable to Top-
Heavy Plans described in Section 3.01(E).
11.108 ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make a Nondeductible
Employee Contribution or an Elective Deferral (if the Employer
takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution
(including Forfeitures thereof) or a Qualified Matching
Contribution.
If a Nondeductible Employee Contribution is required as a
condition of participation in the Plan, any Employee who would be
a Participant in the Plan if such Employee made such a
contribution shall be treated as an Eligible Participant on
behalf of whom no Nondeductible Employee Contributions are made.
11.109 EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
B. The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining
Excess Elective Deferrals pursuant to Section 11.112 and then
determining Excess Contributions pursuant to Section 11.111.
11.110 EXCESS CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate amount of Employer Contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
B. The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the ADPs, beginning
with the highest of such percentages).
11.111 EXCESS ELECTIVE DEFERRALS
Means those Elective Deferrals that are includible in a
Participant's gross income under Section 402(g) of the Code to
the extent such Participant's Elective Deferrals for a taxable
year exceed the dollar limitation under such Code section.
Excess Elective Deferrals shall be treated as annual additions
under the Plan, unless such amounts are distributed no later than
the first April 15 following the close of the Participant's
taxable year.
<PAGE>
32
11.112 MATCHING CONTRIBUTION
Means an Employer Contribution made to this or any other defined
contribution plan on behalf of a Participant on account of an
Elective Deferral or a Nondeductible Employee Contribution made
by such Participant under a plan maintained by the Employer.
Matching Contributions may not be taken into account for purposes
of satisfying the minimum allocation requirement applicable to
Top-Heavy Plans described in Section 3.01(E).
11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS
Means contributions (other than Matching Contributions or
Qualified Matching Contributions) made by the Employer and
allocated to Participants' Individual Accounts that the
Participants may not elect to receive in cash until distributed
from the Plan; that are nonforfeitable when made; and that are
distributable only in accordance with the distribution provisions
that are applicable to Elective Deferrals and Qualified Matching
Contributions.
Qualified Nonelective Contribution may be taken into account for
purposes of satisfying the minimum allocation requirement
applicable to Top-Heavy Plans described in Section 3.01(E).
11.114 QUALIFIED MATCHING CONTRIBUTIONS
Means Matching Contributions which are subject to the
distribution and nonforfeitability requirements under Section
401(k) of the Code when made.
11.115 QUALIFYING CONTRIBUTING PARTICIPANT
Means a Contributing Participant who satisfies the requirements
described in Section 11.302 to be entitled to receive a Matching
Contribution (and Forfeitures, if applicable) for a Plan Year.
11.200 CONTRIBUTING PARTICIPANT
11.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
A. Each Employee who satisfies the eligibility requirements
specified in the Adoption Agreement may enroll as a
Contributing Participant as of any subsequent Entry Date (or
earlier if required by Section 2.03) specified in the
Adoption Agreement for this purpose. A Participant who
wishes to enroll as a Contributing Participant must complete,
sign and file a salary reduction agreement (or agreement to
make Nondeductible Employee Contributions) with the Plan
Administrator.
B. Notwithstanding the times set forth in Section 11.201(A) as
of which a Participant may enroll as a Contributing
Participant, the Plan Administrator shall have the authority
to designate, in a nondiscriminatory manner, additional
enrollment times during the 12 month period beginning on the
Effective Date (or the date that Elective Deferrals may
commence, if later) in order that an orderly first enrollment
might be completed. In addition, if the Employer has
indicated in the Adoption Agreement that Elective Deferrals
may be based on bonuses, then Participants shall be afforded
a reasonable period of time prior to the issuance of such
bonuses to elect to defer them into the Plan.
11.202 CHANGING ELECTIVE DEFERRAL AMOUNTS
A Contributing Participant may modify his or her salary reduction
agreement (or agreement to make Nondeductible Employee
Contributions) to increase or decrease (within the limits placed
on Elective Deferrals (or Nondeductible Employee Contributions)
in the Adoption Agreement) the amount of his or her Compensation
deferred into the Plan. Such modification may only be made as of
the dates specified in the Adoption Agreement for this purpose,
or as of any other more frequent date(s) if the Plan
Administrator permits in a uniform and nondiscriminatory manner.
A Contributing Participant who desires to make such a
modification shall complete, sign and file a new salary reduction
agreement (or agreement to make Nondeductible Employee
Contribution) with the Plan Administrator. The Plan
Administrator may prescribe such uniform and nondiscriminatory
rules it deems appropriate to carry out the terms of this
Section.
11.203 CEASING ELECTIVE DEFERRALS
A Participant may cease Elective Deferrals (or Nondeductible
Employee Contributions) and thus withdraw as a Contributing
Participant as of the dates specified in the Adoption Agreement
for this purpose (or as of any other date if the Plan
Administrator so permits in a uniform and nondiscriminatory
manner) by revoking the authorization to the Employer to make
Elective Deferrals (or Nondeductible Employee Contributions) on
his or her behalf. A Participant who desires to withdraw as a
Contributing Participant shall give written notice of withdrawal
to the Plan Administrator at least thirty days (or such lesser
period of days as the Plan Administrator shall permit in a
uniform and nondiscriminatory manner) before the effective date
of withdrawal. A Participant shall cease to be a Contributing
Participant upon his or her Termination of Employment, or an
account of termination of the Plan.
11.204 RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE
DEFERRALS
A Participant who has withdrawn as a Contributing Participant
under Section 11.203 (or because the Participant has taken a
hardship withdrawal pursuant to Section 11.503) may not again
become a Contributing Participant until the dates set forth in
the Adoption Agreement for this purpose, unless the Plan
Administrator, in a uniform and nondiscriminatory manner, permits
withdrawing Participants to resume their status as Contributing
Participants sooner.
11.205 CERTAIN ONE-TIME IRREVOCABLE ELECTIONS
This Section 11.205 applies where the Employer has indicated in
the Adoption Agreement that an Employee may make a one-time
irrevocable election to have the Employer make contributions to
the Plan on such Employee's behalf. In such event, an Employee
may elect, upon the Employee's first becoming eligible to
participate in the Plan, to have contributions equal to a
specified amount or percentage of the Employee's Compensation
(including no amount of Compensation) made by the Employer on the
Employee's behalf to the Plan (and to any other plan of the
Employer) for the duration of the Employee's employment with the
Employer. Any contributions made pursuant to a one-time
irrevocable election described in this Section are not treated as
made pursuant to a cash or deferred election, are not Elective
Deferrals and are not includible in an Employee's gross income.
The Plan Administrator shall establish such uniform and
nondiscriminatory procedures as it deems necessary or advisable
to administer this provision.
11.300 CONTRIBUTIONS
11.301 CONTRIBUTIONS BY EMPLOYER
The Employer shall make contributions to the Plan in accordance
with the contribution formulas specified in the Adoption
Agreement.
<PAGE>
33
11.302 MATCHING CONTRIBUTIONS
The Employer may elect to make Matching Contributions under the
Plan on behalf of Qualifying Contributing Participants as
provided in the Adoption Agreement. To be a Qualifying
Contributing Participant for a Plan Year, the Participant must
make Elective Deferrals (or Nondeductible Employee Contributions,
if the Employer has agreed to match such contributions) for the
Plan Year, satisfy any age and Years of Eligibility Service
requirements that are specified for Matching Contributions in the
Adoption Agreement and also satisfy any additional conditions set
forth in the Adoption Agreement for this purpose. In a uniform
and nondiscriminatory manner, the Employer may make Matching
Contributions at the same time as it contributes Elective
Deferrals or at any other time as permitted by laws and
regulations.
11.303 QUALIFIED NONELECTIVE CONTRIBUTIONS
The Employer may elect to make Qualified Nonelective
Contributions under the Plan on behalf of Participants as
provided in the Adoption Agreement.
In addition, in lieu of distributing Excess Contributions as
provided in Section 11.505 of the Plan, or Excess Aggregate
Contributions as provided in Section 11.506 of the Plan, and to
the extent elected by the Employer in the Adoption Agreement, the
Employer may make Qualified Nonelective Contributions on behalf
of Participants who are not Highly Compensated Employees that are
sufficient to satisfy either the Actual Deferral Percentage test
or the Average Contribution Percentage test, or both, pursuant to
regulations under the Code.
11.304 QUALIFIED MATCHING CONTRIBUTIONS
The Employer may elect to make Qualified Matching Contributions
under the Plan on behalf of Participants as provided in the
Adoption Agreement.
11.305 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Notwithstanding Section 3.02, if the Employer so allows in the
Adoption Agreement, a Participant may contribute Nondeductible
Employee Contributions to the Plan.
If the Employer has indicated in the Adoption Agreement that
Nondeductible Employee Contributions will be mandatory, then the
Employer shall establish uniform and nondiscriminatory rules and
procedures for Nondeductible Employee Contributions as it deems
necessary and advisable including, but not limited to, rules
describing in amounts or percentages of Compensation Participants
may or must contribute to the Plan.
A separate account will be maintained by the Plan Administrator
for the Nondeductible Employee Contributions for each
Participant.
A Participant may, upon a written request submitted to the Plan
Administrator, withdraw the lesser of the portion of his or her
Individual Account attributable to his or her Nondeductible
Employee Contributions or the amount he or she contributed as
Nondeductible Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as
a result of an Employee's withdrawal of Nondeductible Employee
Contributions.
11.400 NONDISCRIMINATION TESTING
11.401 ACTUAL DEFERRAL PERCENTAGE TEST (ADP)
A. LIMITS ON HIGHLY COMPENSATED EMPLOYEES - The Actual Deferral
Percentage (hereinafter "ADP") for Participants who are
Highly Compensated Employees for each Plan Year and the ADP
for Participants who are not Highly Compensated Employees for
the same Plan Year must satisfy one of the following tests:
1. The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for
Participants who are not Highly Compensated Employees for
the same Plan Year multiplied by 1.25; or
2. The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for
Participants who are not Highly Compensated Employees for
the same Plan Year multiplied by 2.0 provided that the
ADP for Participants who are Highly Compensated Employees
does not exceed the ADP for Participants who are not
Highly Compensated Employees by more than 2 percentage
points.
B. SPECIAL RULES
1. The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her Individual Accounts
under two or more arrangements described in Section
401(k) of the Code, that are maintained by the Employer,
shall be determined as if such Elective Deferrals (and,
if applicable, such Qualified Nonelective Contributions
or Qualified Matching Contributions, or both) were made
under a single arrangement. If a Highly Compensated
Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated under
regulations under Section 401(k) of the Code.
2. In the event that this Plan satisfies the requirements of
Sections 401(k), 401(a)(4), or 410(b) of the Code only if
aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such
sections of the Code only if aggregated with this Plan,
then this Section 11.401 shall be applied by determining
the ADP of Employees as if all such plans were a single
plan. For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Section
401(k) of the Code only if they have the same Plan Year.
3. For purposes of determining the ADP of a Participant who
is a 5% owner or one of the 10 most highly paid Highly
Compensated Employees, the Elective Deferrals (and
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals
for purposes of the ADP test) and Compensation of such
Participant shall include the Elective Deferrals (and, if
applicable, Qualified Nonelective Contributions and
Qualified Matching Contributions, or both) and
Compensation for the Plan Year of family members (as
defined in Section 414(q)(6) of the Code). Family
members, with respect to such Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the ADP both for Participants who are not
Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
4. For purposes of determining the ADP test, Elective
Deferrals, Qualified Nonelective Contributions and
Qualified Matching Contributions must be made before the
last day of the 12 month period immediately following the
Plan Year to which contributions relate.
<PAGE>
34
5. The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount
of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
6. The determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
7. If the Employer elects to take Qualified Matching
Contributions into account as Elective Deferrals for
purposes of the ADP test, then (subject to such other
requirements as may be prescribed by the Secretary of the
Treasury) unless otherwise indicated in the Adoption
Agreement, only the amount of such Qualified Matching
Contributions that are needed to meet the ADP test shall
be taken into account.
8. In the event that the Plan Administrator determines that
it is not likely that the ADP test will be satisfied for
a particular Plan Year unless certain steps are taken
prior to the end of such Plan Year, the Plan
Administrator may require Contributing Participants who
are Highly Compensated Employees to reduce their Elective
Deferrals for such Plan Year in order to satisfy that
requirement. Said reduction shall also be required by the
Plan Administrator in the event that the Plan
Administrator anticipates that the Employer will not be
able to deduct all Employer Contributions from its income
for Federal income tax purposes.
11.402 LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS
A. LIMITS ON HIGHLY COMPENSATED EMPLOYEES - The Average
Contribution Percentage (hereinafter "ACP") for Participants
who are Highly Compensated Employees for each Plan Year and
the ACP for Participants who are not Highly Compensated
Employees for the same Plan Year must satisfy one of the
following tests:
1. The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are not Highly Compensated Employees for
the same Plan Year multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are not Highly Compensated Employees for
the same Plan Year multiplied by 2, provided that the ACP
for the Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who are not
Highly Compensated Employees by more than 2 percentage
points.
B. SPECIAL RULES
1. Multiple Use - If one or more Highly Compensated
Employees participate in both a CODA and a plan subject
to the ACP test maintained by the Employer and the sum of
the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate
Limit, then, as elected in the Adoption Agreement, the
ACP or the ADP of those Highly Compensated Employees who
also participate in a CODA will be reduced (beginning
with such Highly Compensated Employee whose ACP (or ADP,
if elected) is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts (or ADP, if
elected) is reduced shall be treated as an Excess
Aggregate Contribution (or Excess Contribution, if
elected). The ADP and ACP of the Highly Compensated
Employees are determined after any corrections required
to meet the ADP and ACP tests. Multiple use does not
occur if the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and
ACP of the Participants who are not Highly Compensated
Employees.
2. For purposes of this Section 11.402, the Contribution
Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her
Individual Account under two or more plans described in
Section 401(a) of the Code, or arrangements described in
Section 401(k) of the Code that are maintained by the
Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or
more cash or deferred arrangements that have different
plan years, all cash or deferred arrangements ending with
or within the same calendar year shall be treated as a
single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily
disaggregated under regulations under Section 401(m) of
the Code.
3. In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such
Sections of the Code only if aggregated with this Plan,
then this Section shall be applied by determining the
Contribution Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to
satisfy Section 401(m) of the Code only if they have the
same Plan Year.
4. For purposes of determining the Contribution Percentage
of a Participant who is a 5% owner or one of the 10 most
highly paid Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of family
members, (as defined in Section 414(q)(6) of the Code).
Family members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for
Participants who are not Highly Compensated Employees and
for Participants who are Highly Compensated Employees.
5. For purposes of determining the Contribution Percentage
test, Nondeductible Employee Contributions are considered
to have been made in the Plan Year in which contributed
to the Fund. Matching Contributions and Qualified
Nonelective Contributions will be considered made for a
Plan Year if made no later than the end of the 12 month
period beginning on the day after the close of the Plan
Year.
6. The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount
of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
7. The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
8. If the Employer elects to take Qualified Nonelective
Contributions into account as Contribution Percentage
Amounts for purposes of the ACP test, then (subject to
such other requirements as may be prescribed by the
Secretary of the Treasury) unless otherwise indicated in
the Adoption Agreement, only the amount of such Qualified
Nonelective Contributions that are needed to meet the ACP
test shall be taken into account.
9. If the Employer elects to take Elective Deferrals into
account as Contribution Percentage Amounts for purposes
of the ACP test, then (subject to such other requirements
as may be prescribed by the Secretary of the Treasury)
unless otherwise indicated in the Adoption Agreement,
only the amount of such Elective Deferrals that are
needed to meet the ACP test shall be taken into account.
<PAGE>
35
11.500 DISTRIBUTION PROVISIONS
11.501 GENERAL RULE
Distributions from the Plan are subject to the provisions of
Section 6 and the provisions of this Section 11. In the event of
a conflict between the provisions of Section 6 and Section 11,
the provisions of Section 11 shall control.
11.502 DISTRIBUTION REQUIREMENTS
Elective Deferrals, Qualified Nonelective Contributions, and
Qualified Matching Contributions, and income allocable to each
are not distributable to a Participant or his or her Beneficiary
or Beneficiaries, in accordance with such Participant's or
Beneficiary or Beneficiaries' election, earlier than upon
separation from service, death or disability.
Such amounts may also be distributed upon:
A. Termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock
ownership plan (as defined in Section 4975(e) or Section 409
of the Code) or a simplified employee pension plan as defined
in Section 408(k).
B. The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code used in a trade or business of
such corporation if such corporation continues to maintain
this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation
acquiring such assets.
C. The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) if such corporation
continues to maintain this Plan, but only with respect to
Employees who continue employment with such subsidiary.
D. The attainment of age 59 1/2 in the case of a profit sharing
plan.
E. If the Employer has so elected in the Adoption Agreement, the
hardship of the Participant as described in Section 11.503.
All distributions that may be made pursuant to one or more of
the foregoing distributable events are subject to the spousal
and Participant consent requirements (if applicable)
contained in Section 401(a)(11) and 417 of the Code. In
addition, distributions after March 31, 1988, that are
triggered by any of the first three events enumerated above
must be made in a lump sum.
11.503 HARDSHIP DISTRIBUTION
A. GENERAL - If the Employer has so elected in the Adoption
Agreement, distribution of Elective Deferrals (and any
earnings credited to a Participant's account as of the end of
the last Plan Year, ending before July 1, 1989) may be made
to a Participant in the event of hardship. For the purposes
of this Section, hardship is defined as an immediate and
heavy financial need of the Employee where such Employee
lacks other available resources. Hardship distributions are
subject to the spousal consent requirements contained in
Sections 401(a)(11) and 417 of the Code.
B. SPECIAL RULES
1. The following are the only financial needs considered
immediate and heavy: expenses incurred or necessary for
medical care, described in Section 213(d) of the Code, of
the Employee, the Employee's spouse or dependents; the
purchase (excluding mortgage payments) of a principal
residence for the Employee; payment of tuition and
related educational fees for the next 12 months of post-
secondary education for the Employee, the Employee's
spouse, children or dependents; or the need to prevent
the eviction of the Employee from, or a foreclosure on
the mortgage of, the Employee's principal residence.
2. A distribution will be considered as necessary to satisfy
an immediate and heavy financial need of the Employee
only if:
a. The Employee has obtained all distributions, other
than hardship distributions, and all nontaxable loans
under all plans maintained by the Employer;
b. All plans maintained by the Employer provide that the
Employee's Elective Deferrals (and Nondeductible
Employee Contributions) will be suspended for 12
months after the receipt of the hardship
distribution;
c. The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts
necessary to pay any Federal, state or local income
taxes or penalties reasonably anticipated to result
from the distribution); and
d. All plans maintained by the Employer provide that the
Employee may not make Elective Deferrals for the
Employee's taxable year immediately following the
taxable year of the hardship distribution in excess
of the applicable limit under Section 402(g) of the
Code for such taxable year less the amount of such
Employee's Elective Deferrals for the taxable year of
the hardship distribution.
11.504 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
A. GENERAL RULE - A Participant may assign to this Plan any
Excess Elective Deferrals made during a taxable year of the
Participant by notifying the Plan Administrator on or before
the date specified in the Adoption Agreement of the amount of
the Excess Elective Deferrals to be assigned to the Plan. A
Participant is deemed to notify the Plan Administrator of any
Excess Elective Deferrals that arise by taking into account
only those Elective Deferrals made to this Plan and any other
plans of the Employer.
Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss
allocable thereto, shall be distributed no later than April
15 to any Participant to whose Individual Account Excess
Elective Deferrals were assigned for the preceding year and
who claims Excess Elective Deferrals for such taxable year.
B. DETERMINATION OF INCOME OR LOSS - Excess Elective Deferrals
shall be adjusted for any income or loss up to the date of
distribution. The income of loss allocable to Excess
Elective Deferrals is the sum of : (1) income or loss
allocable to the Participant's Elective Deferral account for
the taxable year multiplied by a fraction, the numerator of
which is such Participant's Elective Deferrals for the year
and the denominator is the Participant's Individual Account
balance attributable to Elective Deferrals without regard to
any income or loss occurring during such taxable year; and
(2) 10% of the amount determined under (1) multiplied by the
number of whole calendar months between the end of the
Participant's taxable year and the date of distribution,
counting the month of distribution if distribution occurs
after the 15th of such month. Notwithstanding the preceding
sentence, the Plan Administrator may compute the income or
loss allocable to
<PAGE>
36
Excess Elective Deferrals in the manner described in Section
4 (i.e., the usual manner used by the Plan for allocating
income or loss to Participants' Individual Accounts),
provided such method is used consistently for all
Participants and for all corrective distributions under the
Plan for the Plan Year.
11.505 DISTRIBUTION OF EXCESS CONTRIBUTIONS
A. GENERAL RULE - Notwithstanding any other provision of this
Plan, Excess Contributions, plus any income and minus any
loss allocable thereto, shall be distributed no later than
the last day of each Plan Year to Participants to whose
Individual Accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are
distributed more than 2 1/2 months after the last day of the
Plan Year in which such excess amounts arose, a 10% excise
tax will be imposed on the Employer maintaining the Plan with
respect to such amounts. Such distributions shall be made to
Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each of
such Employees. Excess Contributions of Participants who are
subject to the family member aggregation rules shall be
allocated among the family members in proportion to the
Elective Deferrals (and amounts treated as Elective
Deferrals) of each family member that is combined to
determine the combined ADP.
Excess Contributions (including the amounts recharacterized)
shall be treated as annual additions under the Plan.
B. DETERMINATION OF INCOME OR LOSS - Excess Contributions shall
be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) income or loss allocable to
Participant's Elective Deferral account (and, if applicable,
the Qualified Nonelective Contribution account or the
Qualified Matching Contributions account or both) for the
Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Contributions for the year and the
denominator is the Participant's Individual Account balance
attributable to Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both,
if any of such contributions are included in the ADP test)
without regard to any income or loss occurring during such
Plan Year; and (2) 10% of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the
15th of such month. Notwithstanding the preceding sentence,
the Plan Administrator may compute the income or loss
allocable to Excess Contributions in the manner described in
Section 4 (i.e., the usual manner used by the Plan for
allocating income or loss to Participants' Individual
Accounts), provided such method is used consistently for all
Participants and for all corrective distributions under the
Plan for the Plan Year.
C. ACCOUNTING FOR EXCESS CONTRIBUTIONS - Excess Contributions
shall be distributed from the Participant's Elective Deferral
account and Qualified Matching Contribution account (if
applicable) in proportion to the Participant's Elective
Deferrals and Qualified Matching Contributions (to the extent
used in the ADP test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's
Qualified Nonelective Contribution account only to the extent
that such Excess Contributions exceed the balance in the
Participant's Elective Deferral account and Qualified
Matching Contribution account.
11.506 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
A. GENERAL RULE - Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited, if
forfeitable, or if not forfeitable, distributed no later than
the last day of each Plan Year to Participants to whose
accounts such Excess Aggregate Contributions were allocated
for the preceding Plan Year. Excess Aggregate Contributions
of Participants who are subject to the family member
aggregation rules shall be allocated among the family members
in proportion to the Employee and Matching Contributions (or
amounts treated as Matching Contributions) of each family
member that is combined to determine the combined ACP. If
such Excess Aggregate Contributions are distributed more than
2 1/2 months after the last day of the Plan Year in which
such excess amounts arose, a 10% excise tax will be imposed
on the Employer maintaining the Plan with respect to those
amounts.
Excess Aggregate Contributions shall be treated as annual
additions under the Plan.
B. DETERMINATION OF INCOME OR LOSS - Excess Aggregate
Contributions shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to
Excess Aggregate Contributions is the sum of: (1) income or
loss allocable to the Participant's Nondeductible Employee
Contribution account, Matching Contribution account (if any,
and if all amounts therein are not used in the ADP test) and,
if applicable, Qualified Nonelective Contribution account and
Elective Deferral account for the Plan Year multiplied by a
fraction, the numerator of which is such Participant's Excess
Aggregate Contributions for the year and the denominator is
the Participant's Individual Account balance(s) attributable
to Contribution Percentage Amounts without regard to any
income or loss occurring during such Plan Year; and (2) 10%
of the amount determined under (1) multiplied by the number
of whole calendar months between the end of the Plan Year and
the date of distribution, counting the month of distribution
if distribution occurs after the 15th of such month.
Notwithstanding the preceding sentence, the Plan
Administrator may compute the income or loss allocable to
Excess Aggregate Contributions in the manner described in
Section 4 (i.e., the usual manner used by the Plan for
allocating income or loss to Participants' Individual
Accounts), provided such method is used consistently for all
Participants and for all corrective distributions under the
Plan for the Plan Year.
C. FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS - Forfeitures
of Excess Aggregate Contributions may either be reallocated
to the accounts of Contributing Participants who are not
Highly Compensated Employees or applied to reduce Employer
Contributions, as elected by the Employer in the Adoption
Agreement.
D. ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS - Excess
Aggregate Contributions shall be forfeited, if forfeitable or
distributed on a pro rata basis from the Participant's
Nondeductible Employee Contribution account, Matching
Contribution account, and Qualified Matching Contribution
account (and, if applicable, the Participant's Qualified
Nonelective Contribution account or Elective Deferral
account, or both).
11.507 RECHARACTERIZATION
A Participant may treat his or her Excess Contributions as an
amount distributed to the Participant and then contributed by the
Participant to the Plan. Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements
as Elective Deferrals. Amounts may not be recharacterized by a
Highly Compensated Employee to the extent that such amount in
combination with other Nondeductible Employee Contributions made
by that Employee would exceed any stated limit under the Plan on
Nondeductible Employee Contributions.
Recharacterization must occur no later than two and one-half
months after the last day of the Plan Year in which such Excess
Contributions arose and is deemed to occur no earlier than the
date the last Highly Compensated Employee is informed in writing
of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for
the Participant's tax year in which the Participant would have
received them in cash.
<PAGE>
37
11.508 DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS
Notwithstanding any other provision of the Plan, a Participant's
Elective Deferrals shall be distributed to him or her to the
extent that the distribution will reduce an excess annual
addition (as that term is described in Section 3.05 of the Plan).
11.600 VESTING
11.601 100% VESTING ON CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective
Deferrals, Qualified Nonelective Contributions, Nondeductible
Employee Contributions , and Qualified Matching Contributions is
nonforfeitable. Separate accounts for Elective Deferrals,
Qualified Nonelective Contributions, Nondeductible Employee
Contributions, Matching Contributions, and Qualified Matching
Contributions will be maintained for each Participant. Each
account will be credited with the applicable contributions and
earnings thereon.
11.602 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the
vesting schedule for Matching Contributions in the Adoption
Agreement. In any event, Matching Contributions shall be fully
Vested at Normal Retirement Age, upon the complete or partial
termination of the profit sharing plan, or upon the complete
discontinuance of Employer Contributions. Notwithstanding any
other provisions of the Plan, Matching Contributions or Qualified
Matching Contributions must be forfeited if the contributions to
which they relate are Excess Elective Deferrals, Excess
Contributions, Excess Aggregate Contributions or excess annual
additions which are distributed pursuant to Section 11.508. Such
Forfeitures shall be allocated in accordance with Section
3.01(C).
When a Participant incurs a Termination of Employment, whether a
Forfeiture arises with respect to Matching Contributions shall be
determined in accordance with Section 6.01(D).
<PAGE>
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Standardized Money Purchase Pension Plan
FFN: 50218352702-002 Case: 9500722 EIN: 42-0623913
BPD: 02 Plan: 002 Letter Serial No: D264074a
Washington, DC 20224
Person to Contact: Ms. Arrington
FARM BUREAU LIFE INSURANCE CO.
Telephone Number: (202) 622-8173
5400 UNIVERSITY AVENUE
Refer Reply to: CP:E:EP:Q:ICU
WEST DES MOINES, IA 50265
Date: 06/06/95
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03
of Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable.
<PAGE>
Because you submitted this plan after the later of December 31, 1994, or the
date that was 90 days after the date on which a favorable opinion letter was
issued for your mass submitter's plan, it does not meet the requirements for the
extension of the remedial amendment period provided by Rev. Proc. 95-12, 1995-3
I.R.B. 24.
This letter may not be relied upon with respect to whether the plan satisfies
the qualification requirements as amended by Uruguay Round Agreements Act, Pub.
L. 103-465.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely Yours,
John Swieca /s/
Chief, Employee Plans Technical Branch 1
<PAGE>
Internal Revenue Service Department of the
Treasury
Plan Description: Prototype Non-standardized Safe Harbor Money Purchase
Pension Plan
FFN: 50318352702-004 Case: 9500724 EIN: 42-0623913
BPD: 02 Plan: 004 Letter Serial No: D364076a
Washington, DC 20224
Person to Contact: Ms. Arrington
FARM BUREAU LIFE INSURANCE CO.
Telephone Number: (202) 622-8173
5400 UNIVERSITY AVENUE
Refer Reply to: CP:E:EP:Q:ICU
WEST DES MOINES, IA 50265
Date: 06/06/95
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the
benefit of their employees. This opinion relates only to the
acceptability of the form of the plan under the Internal Revenue Code. It
is not an opinion of the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan. You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling
or determination as to whether an employer's plan qualifies under Code
section 401(a). Therefore, an employer adopting the form of the plan
should apply for a determination letter by filing an application with the
Key District Director of Internal Revenue Service on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
The form of the plan is a nonstandardized safe harbor plan that meets the
requirements of section 3 of Rev. Proc. 93-10, 1993-5 I.R.B. 13.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03
of Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable
Because you submitted this plan after the later of December 31, 1994, or
the date that was 90 days after the date on which a favorable opinion
letter was issued for your mass submitter's plan, it does not meet the
requirements for the extension of the remedial amendment period provided
by Rev. Proc. 95-12, 1995-3 I.R.B. 24.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by Uruguay Round
Agreements Act, Pub. L. 103-465.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This
number is only for use of the sponsoring organization. Individual
participants and/or adopting employers with questions concerning the plan
should contact the sponsoring organization. The plan's adoption agreement
must include the sponsoring organization's address and telephone number
for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if
you modify or discontinue sponsorship of this plan.
Sincerely Yours,
John Swieca /s/
Chief, Employee Plans Technical Branch 1
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE STANDARDIZED MONEY PURCHASE PENSION PLAN
ADOPTION AGREEMENT
- --------------------------------------------------------------------------------------------------------------------------
<S><C>
SECTION 1. EMPLOYER INFORMATION
Name of Employer
----------------------------------------------------------------------------------------
Address
-------------------------------------------------------------------------------------------------
City State Zip
---------------------------------------- --------------------- -------------------------------
Telephone Employer's Federal Tax Identification Number
--------------------- ------------------------------------
Type of Business (CHECK ONLY ONE) [ ] Sole Proprietorship [ ] Partnership [ ] C Corporation
[ ] S Corporation [ ] Other (SPECIFY)
--------------------------------
[ ] Check here if Related Employers may participate in this Plan and attach a Related Employer
Participation Agreement for each Related Employer who will participate in this Plan.
Business Code
-------------------------------------
Name of Plan
--------------------------------------------------------------------------------------------
Name of Trust (IF DIFFERENT FROM PLAN NAME)
-------------------------------------------------------------
Plan Sequence Number________(ENTER 001 IF THIS IS THE FIRST QUALIFIED PLAN THE EMPLOYER HAS EVER
MAINTAINED, ENTER 002 IF IT IS THE SECOND, ETC.)
Trust Identification Number (IF APPLICABLE)
---------------------
Account Number (OPTIONAL)
---------------------------------------
SECTION 2. EFFECTIVE DATES (CHECK AND COMPLETE OPTION A OR B):
OPTION A: [ ] This is the initial adoption of a money purchase pension plan by the Employer.
The Effective Date of this Plan is_______________, 19____.
NOTE: THE EFFECTIVE DATE IS USUALLY THE FIRST DAY OF THE
PLAN YEAR IN WHICH THIS ADOPTION AGREEMENT IS SIGNED.
OPTION B: [ ] This is an amendment and restatement of an existing money purchase pension plan
(a Prior Plan). The Prior Plan was initially effective on______________, 19____.
The Effective Date of this amendment and restatement is______________, 19____.
NOTE: THE EFFECTIVE DATE IS USUALLY THE FIRST DAY OF THE PLAN YEAR IN WHICH THIS ADOPTION
AGREEMENT IS SIGNED.
SECTION 3. RELEVANT TIME PERIODS COMPLETE PARTS A THROUGH C
PART A. Employer's Fiscal Year:
The Employer's fiscal year ends (SPECIFY MONTH AND DATE)
------------------------------------------------------
PART B. Plan Year Means:
OPTION 1: [ ] The 12-consecutive month period which coincides with the Employer's fiscal year.
OPTION 2: [ ] The calendar year.
OPTION 3: [ ] Other 12-consecutive month period (SPECIFY)
-------------------------------------------------
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE SELECTED.
</TABLE>
#4002(6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
If the initial Plan Year is less than 12 months (a short Plan Year)
specify such Plan Year's beginning and ending
dates
---------------------------------------------------------------
PART C. Limitation Year Means:
OPTION 1: [ ] The Plan Year.
OPTION 2: [ ] The calendar year.
OPTION 3: [ ] Other 12-consecutive month period. (SPECIFY)
-------
--------------------------------------------------
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 4. ELIGIBILITY REQUIREMENTS COMPLETE PARTS A THROUGH F
PART A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan
after completing____(ENTER 0, 1, 2 OR ANY FRACTION LESS THAN 2)
Years of Eligibility Service.
NOTE: IF MORE THAN 1 YEAR IS SELECTED, THE IMMEDIATE 100% VESTING
SCHEDULE OF SECTION 8 WILL AUTOMATICALLY APPLY. IF LEFT BLANK, THE
YEARS OF ELIGIBILITY SERVICE REQUIRED WILL BE DEEMED TO BE 0. IF A
FRACTION IS SELECTED, AN EMPLOYEE WILL NOT BE REQUIRED TO
COMPLETE ANY SPECIFIED NUMBER OF HOURS OF SERVICE TO RECEIVE
CREDIT FOR A FRACTIONAL YEAR. IF A SINGLE ENTRY DATE IS SELECTED
IN SECTION 4, PART F, THE YEARS OF ELIGIBILITY SERVICE REQUIRED
CANNOT EXCEED 1 1/2.
PART B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan
after attaining age (NO MORE THAN 21).
-------------
NOTE: IF LEFT BLANK, IT WILL BE DEEMED THERE IS NO AGE REQUIREMENT
FOR ELIGIBILITY. IF A SINGLE ENTRY DATE IS SELECTED IN SECTION 4,
PART F , THE AGE REQUIRED CANNOT EXCEED 20 1/2.
PART C. Employees Employed As of Effective Date:
Will all Employees employed as of the Effective Date of this Plan
who have not otherwise met the Years of Eligibility Service and age
requirements specified above be considered to have met those
requirements as of the Effective Date? [ ] Yes [ ] No
NOTE: IF A BOX IS NOT CHECKED, "NO" WILL BE DEEMED TO BE SELECTED.
PART D. Exclusion of Certain Classes of Employees:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
1. [ ] Those Employees included in a unit of Employees covered
by a collective bargaining agreement between the Employer
and Employee representatives, if retirement benefits were
the subject of good faith bargaining and if two percent or
less of the Employees who are covered pursuant to that
agreement are professionals as defined in Section
1.410(b)-9 of the regulations. For this purpose, the
term "employee representatives" does not include any
organization more than half of whose members are
Employees who are owners, officers, or executives of
the Employer.
2. [ ] Those Employees who are non-resident aliens (within the
meaning of Section 7701(b)(1)(B) of the Code) and who
received no earned income (within the meaning of Section
911(d)(2) of the Code) from the Employer which constitutes
income from sources within the United States (within the
meaning of Section 861(a)(3) of the Code).
PART E. Hours Required For Eligibility Purposes:
1. ________Hours of Service (NO MORE THAN 1,000) shall be required
to constitute a Year of Eligibility Service.
2. ________Hours of Service (NO MORE THAN 500 BUT LESS THAN THE
NUMBER SPECIFIED IN SECTION 4, PART E, ITEM 1, ABOVE) must be
exceeded to avoid a Break in Eligibility Service.
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
3. For purposes of determining Years of Eligibility Service,
Employees shall be given credit for Hours of Service with the
following predecessor employer(s): (COMPLETE IF
APPLICABLE)
-------------------------------------------------------
PART F. Entry Dates:
The Entry Dates for participation shall be (CHOOSE ONE):
OPTION 1: [ ] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
OPTION 2: [ ] Other (SPECIFY)
------------------------------------
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED. OPTION 2 CAN BE SELECTED ONLY IF THE ELIGIBILITY
REQUIREMENTS AND ENTRY DATES ARE COORDINATED SUCH THAT EACH EMPLOYEE
WILL BECOME A PARTICIPANT IN THE PLAN NO LATER THAN THE EARLIER OF:
(1) THE FIRST DAY OF THE PLAN YEAR BEGINNING AFTER THE DATE THE
EMPLOYEE SATISFIES THE AGE AND SERVICE REQUIREMENTS OF SECTION
410(A) OF THE CODE; OR (2) 6 MONTHS AFTER THE DATE THE EMPLOYEE
SATISFIES SUCH REQUIREMENTS.
SECTION 5. METHOD OF DETERMINING SERVICE COMPLETE PART A OR B
PART A. Hours of Service Equivalencies:
Service will be determined on the basis of the method selected
below. Only one method may be selected. The method selected will
be applied to all Employees covered under the Plan. (CHOOSE ONE):
OPTION 1. [ ] On the basis of actual hours for which an Employee
is paid or entitled to payment.
OPTION 2. [ ] On the basis of days worked. An Employee will be
credited with 10 Hours of Service if under Section
1.24 of the Plan such Employee would be credited
with at least 1 Hour of Service during the day.
OPTION 3. [ ] On the basis of weeks worked. An Employee will be
credited with 45 Hours of Service if under Section
1.24 of the Plan such Employee would be credited
with at least 1 Hour of Service during the week.
OPTION 4. [ ] On the basis of months worked. An Employee will
be credited with 190 Hours of Service if under
Section 1.24 of the Plan such Employee would be
credited with at least 1 Hour of Service during
the month.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED. THIS SECTION 5, PART A WILL NOT APPLY IF THE ELAPSED TIME
METHOD OF SECTION 5, PART B IS SELECTED.
PART B. Elapsed Time Method:
In lieu of tracking Hours of Service of Employees, will the elapsed
time method described in Section 2.07 of the Plan be used? (CHOOSE
ONE)
OPTION 1: [ ] No
OPTION 2: [ ] Yes
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 6. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA COMPLETE PARTS A AND B
PART A. Contribution Formula (CHOOSE ONE):
OPTION 1: [ ] Nonintegrated Formula. For each Plan Year the
Employer will contribute for each Qualifying
Participant an amount equal to ------% (NOT TO
EXCEED 25%) of the Qualifying Participant's
Compensation for the Plan Year.
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<PAGE>
Page 4
OPTION 2: [ ] Integrated Formula. For each Plan Year, the
Employer will contribute for each Qualifying
Participant an amount equal to the sum of the
amounts determined in Step 1 and 2:
Step 1. An amount equal to ______% (THE BASE
CONTRIBUTION PERCENTAGE) of the
Participant's Compensation for the Plan
Year up to the integration level; plus
Step 2. An amount equal to ______% (NOT TO EXCEED
THE BASE CONTRIBUTION PERCENTAGE BY MORE
THAN THE LESSER OF: (1) THE BASE
CONTRIBUTION PERCENTAGE, OR (2) THE MONEY
PURCHASE MAXIMUM DISPARITY RATE AS
DESCRIBED IN SECTION 3.01(B)(3) OF THE
PLAN) of such Participant's Compensation
for the Plan Year in excess of the
integration level.
The integration level shall be (CHOOSE ONE):
SUBOPTION (A): [ ] The Taxable Wage Base.
SUBOPTION (B): [ ] $_______ (A DOLLAR AMOUNT
LESS THAN THE TAXABLE WAGE
BASE).
SUBOPTION (C): [ ] _______% (NOT MORE THAN
100%) of the Taxable Wage
Base.
NOTE: IF NO OPTION IS SELECTED, SUBOPTION (A)
WILL BE DEEMED TO BE SELECTED.
OPTION 3: [ ] Hour of Service Formula.
The Employer will contribute $_______ for each
Hour of Service completed during the Plan Year for
each Qualifying Participant as described below.
Notwithstanding any other provision of the Plan,
the Employer Contribution under this option will
only be made for Employees who are in the
following classes of Employees and who also meet
the conditions required to be a Qualifying
Participant:
SUBOPTION (A): [ ] All Qualifying Participants.
SUBOPTION (B): [ ] All Qualifying Participants
who are hourly Employees.
SUBOPTION (C): [ ] Other (SPECIFY)
-------------
NOTE: IF NO OPTION IS SELECTED, SUBOPTION (A)
WILL BE DEEMED TO BE SELECTED.
OPTION 4: [ ] Frozen Plan. This Plan is frozen effective_______
_______________ and the Employer will not make
additional contributions to the Plan after such
date.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
PART B. Qualifying Participants:
A Participant will be a Qualifying Participant and thus entitled to
share in the Employer Contribution for any Plan Year only if the
Participant is a Participant on at least one day of such Plan Year
and satisfies the following additional conditions (CHECK ONE OR MORE
OPTIONS):
OPTION 1: [ ] No Additional Conditions.
OPTION 2: [ ] Hours of Service Requirement. The Participant
completes at least ------ (NOT MORE THAN 500)
Hours of Service during the Plan Year. However,
this condition will be waived for the following
reasons (CHECK AT LEAST ONE):
[ ] The Participant's Death.
[ ] The Participant's Termination of Employment
after having incurred a Disability.
[ ] The Participant's Termination of Employment
after having reached Normal Retirement Age.
[ ] This condition will not be waived.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED
TO BE SELECTED.
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
SECTION 7. COMPENSATION COMPLETE PARTS A THROUGH D
PART A. Basic Definition:
Compensation will mean all of each Participant's (CHOOSE ONE):
OPTION 1: [ ] W-2 wages.
OPTION 2: [ ] Section 3401(a) wages.
OPTION 3: [ ] 415 safe-harbor compensation.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
PART B. Measuring Period for Compensation:
Compensation shall be determined over the following applicable
period (CHOOSE ONE):
OPTION 1: [ ] The Plan Year.
OPTION 2: [ ] The calendar year ending with or within the Plan
Year.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
PART C. Inclusion of Elective Deferrals:
Does Compensation include Employer Contributions made pursuant to a
salary reduction agreement which are not includible in the gross
income of the Employee under Sections 125, 402(e)(3),
402(h)(1)(B), and 403(b) of the Code? [ ] Yes [ ] No
NOTE: IF NEITHER BOX IS CHECKED, "YES" WILL BE DEEMED TO BE
SELECTED.
PART D. Pre-Entry Date Compensation:
For the Plan Year in which an Employee enters the Plan, the
Employee's Compensation which shall be taken into account for
purposes of the Plan shall be (CHOOSE ONE):
OPTION 1: [ ] The Employee's Compensation only from the time the
Employee became a Participant in the Plan.
OPTION 2: [ ] The Employee's Compensation for the whole of
such Plan Year.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 8. VESTING AND FORFEITURES COMPLETE PARTS A THROUGH D
PART A. Vesting Schedule. A Participant shall become Vested in his or
her Individual Account as follows (CHOOSE ONE):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (COMPLETE IF CHOSEN)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
1 0% 0% 100% 0% ----%
2 0% 20% 100% 0% ----%
3 0% 40% 100% 20% ----% (not less than 20%)
4 0% 60% 100% 40% ----% (not less than 40%)
5 100% 80% 100% 60% ----% (not less than 60%)
6 100% 100% 100% 80% ----% (not less than 80%)
7 100% 100% 100% 100% ----% (not less than 100%)
</TABLE>
<PAGE>
NOTE: IF NO OPTION IS SELECTED, OPTION 3 WILL BE DEEMED TO BE SELECTED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 6
PART B. Hours Required For Vesting Purposes:
1. _______Hours of Service (NO MORE THAN 1,000) shall be required
to constitute a Year of Vesting Service.
2. -------- Hours of Service (NO MORE THAN 500 BUT LESS THAN THE
NUMBER SPECIFIED IN SECTION 8, PART B, ITEM 1, ABOVE) must be
exceeded to avoid a Break in Vesting Service.
3. For purposes of determining Years of Vesting Service, Employees
shall be given credit for Hours of Service with the following
predecessor employer(s) (COMPLETE IF
APPLICABLE)-------------------
- --------------------------------------------------------------------------------
PART C. Exclusion of Certain Years of Vesting Service:
All of an Employee's Years of Vesting Service with the Employer are
counted to determine the vesting percentage in the Participant's
Individual Account except (CHECK ANY THAT APPLY):
[ ] Years of Vesting Service before the Employee reaches age 18.
[ ] Years of Vesting Service before the Employer maintained this
Plan or a predecessor plan.
PART D. Allocation of Forfeitures:
Forfeitures shall be (CHOOSE ONE):
OPTION 1: [ ] Allocated to the Individual Accounts of the
Participants specified below in the manner as
described in Section 6, Part A (for Employer
Contributions)
The Participants entitled to receive allocations of
Forfeitures shall be (CHOOSE ONE):
SUBOPTION (a): [ ] Only Qualified
Participants.
SUBOPTION (b): [ ] All Participants.
NOTE: IF NO OPTION IS SELECTED, SUBOPTION (a) WILL BE
DEEMED TO BE SELECTED.
OPTION 2: [ ] Applied to reduce Employer Contributions (CHOOSE
ONE):
SUBOPTION (a): [ ] For the Plan Year
for which the
Forfeiture arises.
SUBOPTION (b): [ ] For any Plan Year
subsequent to the
Plan Year for which
the Forfeiture
arises.
OPTION 3: [ ] Applied first to the payment of the Plan's
administrative expenses and any excess applied to
reduce Employer Contributions (CHOOSE ONE):
SUBOPTION (a): [ ] For the Plan Year
for which the
Forfeiture arises.
SUBOPTION (b): [ ] For any Plan Year
subsequent to the
Plan Year for which
the Forfeiture
arises.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 AND SUBOPTION (a) WILL BE
DEEMED TO BE SELECTED.
SECTION 9. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE
PART A. The Normal Retirement Age under the Plan shall be (CHECK AND
COMPLETE ONE OPTION):
OPTION 1: [ ] Age 65.
OPTION 2: [ ] Age -------- (NOT TO EXCEED 65).
OPTION 3: [ ] The later of age -------- (NOT TO EXCEED 65) or
the -------- (NOT TO EXCEED 5TH) anniversary of
the first day of the first Plan Year in which the
Participant commenced participation in the Plan.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 7
PART B. Early Retirement Age (CHOOSE ONE OPTION):
OPTION 1: [ ] An Early Retirement Age is not applicable under
the Plan.
OPTION 2: [ ] Age ------ (NOT LESS THAN 55 NOR MORE THAN 65).
OPTION 3: [ ] A Participant satisfies the Plan's Early
Retirement Age conditions by attaining age
-------- (NOT LESS THAN 55) and completing
-------- Years of Vesting Service.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 10. DISTRIBUTIONS
Distributable Events. Answer each of the following items.
A. Termination of Employment Before Normal Retirement Age. May a
Participant who has not reached Normal Retirement Age request a
distribution from the Plan upon Termination of Employment?
[ ] Yes [ ] No
B. Disability. May a Participant who has incurred a Disability
request a distribution from the Plan?
[ ] Yes [ ] No
C. Attainment of Normal Retirement Age. May a Participant who has
attained Normal Retirement Age but has not incurred a Termination
of Employment request a distribution from the Plan?
[ ] Yes [ ] No
D. Withdrawals of Rollover or Transfer Contributions. Will Employees
be permitted to withdraw their Rollover or Transfer Contributions
at any time?
[ ] Yes [ ] No
NOTE: IF A BOX IS NOT CHECKED FOR AN ITEM, "YES" WILL BE DEEMED TO BE
SELECTED FOR THAT ITEM. SECTION 411(d)(6) OF THE CODE PROHIBITS THE
ELIMINATION OF PROTECTED BENEFITS. IN GENERAL, PROTECTED BENEFITS
INCLUDE THE FORMS AND TIMING OF PAYOUT OPTIONS. IF THE PLAN IS BEING
ADOPTED TO AMEND AND REPLACE A PRIOR PLAN THAT PERMITTED A
DISTRIBUTION OPTION DESCRIBED ABOVE, YOU MUST ANSWER "YES" TO THAT
ITEM.
SECTION 11. JOINT AND SURVIVOR ANNUITY
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to ----% (AT LEAST 50% BUT NO MORE THAN 100%) of
the amount paid to the Participant prior to his or her death.
SECTION 12. OTHER OPTIONS ANSWER "YES" OR "NO" TO EACH OF THE FOLLOWING
QUESTIONS BY CHECKING THE APPROPRIATE BOX. IF A BOX IS NOT
CHECKED FOR A QUESTION, THE ANSWER WILL BE DEEMED TO BE "NO."
A. Loans: Will loans to Participants pursuant to Section 6.08 of the
Plan be permitted? [ ] Yes [ ] No
B. Insurance: Will the Plan allow for the investment in insurance
policies pursuant to Section 5.13 of the Plan?
[ ] Yes [ ]No
C. Employer Securities: Will the Plan allow for the investment in
qualifying Employer securities or qualifying Employer real
property?
[ ] Yes [ ] No
D. Rollover Contributions: Will Employees be permitted to make
rollover contributions to the Plan pursuant to Section 3.03 of the
Plan?
[ ] Yes [ ] No
[ ] Yes, but only
after becoming a
Participant.
E. Transfer Contributions: Will Employees be permitted to make
transfer contributions to the Plan pursuant to Section 3.04 of the
Plan?
[ ] Yes [ ] No
[ ] Yes, but only
after becoming a
Participant.
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 8
F. Will Participants be permitted to direct the investment of their
Plan assets pursuant to Section 5.14 of the Plan?
[ ] Yes [ ] No
SECTION 13. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan (other than
a paired standardized profit sharing plan using the same Basic Plan
Document as this Plan) in which any Participant in this Plan is (or
was) a Participant or could become a Participant, you must complete
this section. You must also complete this section if you maintain a
welfare benefit fund, as defined in Section 419(e) of the Code, or an
individual medical account, as defined in Section 415(l)(2) of the
Code, under which amounts are treated as annual additions with respect
to any Participant in this Plan.
PART A.Individually Designed Defined Contribution Plan:
If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other
plan were a master or prototype plan.
2. [ ] Other method. (PROVIDE THE METHOD UNDER WHICH THE
PLANS WILL LIMIT TOTAL ANNUAL ADDITIONS TO THE
MAXIMUM PERMISSIBLE AMOUNT, AND WILL PROPERLY
REDUCE ANY EXCESS AMOUNTS, IN A MANNER THAT
PRECLUDES EMPLOYER
DISCRETION.)--------------------------------------
PART B.Defined Benefit Plan:
If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code.
1. [ ] If the projected annual addition to this Plan to the
account of a Participant for any limitation year would
cause the 1.0 limitation of Section 415(e) of the Code to
be exceeded, the annual benefit of the defined benefit
plan for such limitation year shall be reduced so that the
1.0 limitation shall be satisfied.
If it is not possible to reduce the annual benefit of the
defined benefit plan and the projected annual addition to
this Plan to the account of a Participant for a limitation
year would cause the 1.0 limitation to be exceeded, the
Employer shall reduce the Employer Contribution which is to
be allocated to this Plan on behalf of such Participant so
that the 1.0 limitation will be satisfied. (The provisions
of Section 415(e) of the Code are incorporated herein by
reference under the authority of Section 1106(h) of the Tax
Reform Act of 1986.)
2. [ ] Other method. (PROVIDE LANGUAGE DESCRIBING ANOTHER
METHOD. SUCH LANGUAGE MUST PRECLUDE EMPLOYER
DISCRETION.)_____________________________________________
SECTION 14. TOP-HEAVY MINIMUM COMPLETE PARTS A AND B
PART A.Minimum Allocation or Benefit:
For any Plan Year with respect to which this Plan is a Top-Heavy Plan,
any minimum allocation required pursuant to Section 3.01(E) of the
Plan shall be made (CHOOSE ONE):
OPTION 1: [ ] To this Plan.
OPTION 2: [ ] To the following other plan maintained by the
Employer (SPECIFY NAME AND PLAN NUMBER OF
PLAN) ___________________________________________
OPTION 3: [ ] In accordance with the method described on an
attachment to this Adoption Agreement.
(ATTACH LANGUAGE DESCRIBING THE METHOD THAT
WILL BE USED TO SATISFY SECTION 416 OF THE
CODE. SUCH METHOD MUST PRECLUDE EMPLOYER
DISCRETION.)
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 9
PART B.Top-Heavy Vesting Schedule:
Pursuant to Section 6.01(C) of the Plan, the vesting schedule that
will apply when this Plan is a Top-Heavy Plan (unless the Plan's
regular vesting schedule provides for more rapid vesting) shall be
(CHOOSE ONE):
OPTION 1: [ ] 6 Year Graded.
OPTION 2: [ ] 3 Year Cliff.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 15.PROTOTYPE SPONSOR
Name of Prototype Sponsor___________________________________________
Address_____________________________________________________________
Telephone Number____________________________________________________
PERMISSIBLE INVESTMENTS
The assets of the Plan shall be invested only in those investments
described below (TO BE COMPLETED BY THE PROTOTYPE SPONSOR):
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
SECTION 16.TRUSTEE OR CUSTODIAN
OPTION A. [ ] Financial Organization as Trustee or Custodian
CHECK ONE: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
Financial Organization______________________________________________
Signature___________________________________________________________
Type Name___________________________________________________________
COLLECTIVE OR COMMINGLED FUNDS
List any collective or commingled funds maintained by the financial
organization Trustee in which assets of the Plan may be invested
(COMPLETE IF APPLICABLE).
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 10
OPTION B. [ ] Individual Trustee(s)
Signature __________________________________
Type Name __________________________________
Signature __________________________________
Type Name __________________________________
Signature __________________________________
Type Name __________________________________
Signature __________________________________
Type Name __________________________________
SECTION 17. RELIANCE
An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in Section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for key employees, as defined in Section 419A(d)(3)
of the Code, or an individual medical account, as defined in Section
415(l)(2) of the Code) in addition to this Plan (other than a paired
standardized profit sharing plan using the same Basic Plan Document as
this Plan) may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Internal Revenue Code. If the
Employer who adopts or maintains multiple plans wishes to obtain
reliance that his or her plan(s) are qualified, application for a
determination letter should be made to the appropriate Key District
Director of Internal Revenue.
The Employer may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code unless the terms of the Plan,
as herein adopted or amended, that pertain to the requirements of
Sections 401(a)(4), 401(a)(17), 401(l), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986, or later laws,
(a) are made effective retroactively to the first day of the first
Plan Year beginning after December 31, 1988 (or such later date on
which these requirements first become effective with respect to this
Plan); or (b) are made effective no later than the first day on which
the Employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and the
prior provisions of the Plan constitute such an interpretation.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 04.
SECTION 18. EMPLOYER SIGNATURE IMPORTANT: PLEASE READ BEFORE SIGNING.
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer______________________________________________
Date Signed__________________
Type Name___________________________________________________________
Title________________________
#4002 (6/94) F94 -C-1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
INTERNAL REVENUE SERVICE Department of the
Treasury
Plan Description: Prototype Standardized Profit Sharing Plan
FFN: 50218352702-001 Case: 9500721 EIN: 42-0623913
BPD: 02 Plan: 001 Letter Serial No: D264073a
Washington, DC 20224
Person to Contact: Ms. Arrington
FARM BUREAU LIFE INSURANCE CO.
Telephone Number: (202) 622-8173
5400 UNIVERSITY AVENUE
Refer Reply to: CP:E:EP:Q:ICU
WEST DES MOINES, IA 50265
Date: 06/06/95
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable
under section 401 of the Internal Revenue Code for use by employers
for the benefit of their employees. This opinion relates only to the
acceptability of the form of the plan under the Internal Revenue Code.
It is not an opinion of the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts
this plan. You are also required to send a copy of the approved form
of the plan, any approved amendments and related documents to each Key
District Director of Internal Revenue Service in whose jurisdiction
there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a
ruling or determination as to whether an employer's plan qualifies
under Code section 401(a). An employer who adopts this plan will be
considered to have a plan qualified under Code section 401(a) provided
all the terms of the plan are followed, and the eligibility
requirements and contribution or benefit provisions are not more
favorable for highly compensated employees than for other employees.
Except as stated below, the Key District Director will not issue a
determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of
Code section 401(a)(16) if: (1) an employer ever maintained another
qualified plan for one or more employees who are covered by this plan,
other than a specified paired plan within the meaning of section 7 of
Rev. Proc. 89-9, 1989-1 C.B. 780; or (2) after December 31, 1985, the
employer maintains a welfare benefit fund defined in Code section
419(e), which provides postretirement medical benefits allocated to
separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this
opinion letter with respect to: (1) whether any amendment or series of
amendments to the plan satisfies the nondiscrimination requirements of
section 1.401(a)(4)-5(a) of the regulations, except with respect to
plan amendments granting past service that meet the safe harbor
described in section 1.401(a)(4)-5(a)(5) and are not part of a pattern
of amendments that significantly discriminates in favor of highly
compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the
regulations with respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a
plan other than a standardized plan may not rely on this opinion
letter with respect to whether a benefit, right or other feature that
is prospectively eliminated satisfies the current availability
requirements of section 1.401(a)-4 of the regulations.
The employer may request a determination (1) as to whether the plan,
considered with all related qualified plans and, if appropriate,
welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code
section 415; (2) regarding the nondiscriminatory effect of grants of
past service; and (3) with respect to whether a prospectively
eliminated benefit, right or feature satisfies the current
availability requirements.
Our opinion does not apply to the form of the plan for purposes of
section 401(a) of the Code unless the terms of the plan, as adopted or
amended, that pertain to the requirements of sections 401(a)(4),
401(a)(5), 401(a)(17), 401(l), 410(b) and 414(s) of the Code, as
amended by the Tax Reform Act of 1986 or subsequent legislation, (a)
are made effective retroactively to the first day of the first plan
year beginning after December 31, 1988 (or such other date on which
these requirements first became effective with respect to this plan);
or (b) are made effective no later than the first day on which the
employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and the
prior provisions of the plan constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03
of Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable.
<PAGE>
Because you submitted this plan after the later of December 31, 1994,
or the date that was 90 days after the date on which a favorable
opinion letter was issued for your mass submitter's plan, it does not
meet the requirements for the extension of the remedial amendment
period provided by Rev. Proc. 95-12, 1995-3 I.R.B. 24.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by Uruguay Round
Agreements Act, Pub. L. 103-465.
If you, the sponsoring organization, have any questions concerning the
IRS processing of this case, please call the above telephone number.
This number is only for use of the sponsoring organization.
Individual participants and/or adopting employers with questions
concerning the plan should contact the sponsoring organization. The
plan's adoption agreement must include the sponsoring organization's
address and telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number and the most convenient time for us to call in case
we need more information. Whether you call or write, please refer to
the Letter Serial Number and File Folder Number shown in the heading
of this letter.
You should keep this letter as a permanent record. Please notify us
if you modify or discontinue sponsorship of this plan.
Sincerely Yours,
John Swieca /s/
Chief, Employee Plans Technical Branch 1
<PAGE>
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Non-standardized Safe Harbor Profit Sharing Plan
FFN: 50318352702-003 Case: 9500723 EIN: 42-0623913
BPD: 02 Plan: 003 Letter Serial No: D364075a
Washington, DC 20224
Person to Contact: Ms. Arrington
FARM BUREAU LIFE INSURANCE CO.
Telephone Number: (202) 622-8173
5400 UNIVERSITY AVENUE
Refer Reply to: CP:E:EP:Q:ICU
WEST DES MOINES, IA 50265
Date: 06/06/95
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
The form of the plan is a nonstandardized safe harbor plan that meets the
requirements of section 3 of Rev. Proc. 93-10, 1993-5 I.R.B. 13.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03 of
Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable.
Because you submitted this plan after the later of December 31, 1994, or the
date that was 90 days after the date on which a favorable opinion letter was
issued for your mass submitter's plan, it does not meet the requirements for the
extension of the remedial amendment period provided by Rev. Proc. 95-12, 1995-3
I.R.B. 24.
This letter may not be relied upon with respect to whether the plan satisfies
the qualification requirements as amended by Uruguay Round Agreements Act, Pub.
L. 103-465.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely Yours,
John Swieca /s/
Chief, Employee Plans Technical Branch 1
<PAGE>
FLEXIBLE STANDARDIZED PROFIT SHARING PLAN
ADOPTION AGREEMENT
________________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer_________________________________________________
Address__________________________________________________________
City____________________________________State_________Zip________
Telephone ___-______
Employer's Federal Tax Identification Number___________
Type of Business (CHECK ONLY ONE) [ ] Sole Proprietorship
[ ] Partnership
[ ] C Corporation
[ ] S Corporation
[ ] Other (SPECIFY)_________
[ ] Check here if Related Employers may participate in this
Plan and attach a Related Employer Participation
Agreement for each Related Employer who will
participate in this Plan.
Business Code_______________________________
Name of Plan_____________________________________________________
Name of Trust (IF DIFFERENT FROM PLAN NAME)______________________
Plan Sequence Number_____________(ENTER 001 IF THIS IS THE FIRST
QUALIFIED PLAN THE EMPLOYER HAS EVER MAINTAINED, ENTER 002 IF IT
IS THE SECOND, ETC.)
Trust Identification Number (IF APPLICABLE)__________________
Account Number (OPTIONAL)______________________________
SECTION 2. EFFECTIVE DATES
General Effective Dates (CHECK AND COMPLETE OPTION 1 OR 2):
Option 1: [ ] This is the initial adoption of a profit
sharing plan by the Employer.
The Effective Date of this Plan is
___________________, 19__.
NOTE: THE EFFECTIVE DATE IS USUALLY THE FIRST DAY OF
THE PLAN YEAR IN WHICH THIS ADOPTION AGREEMENT IS
SIGNED.
Option 2: [ ] This is an amendment and restatement of an
existing profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on
______________________, 19________.
The Effective Date of this amendment and
restatement is _________________, 19_______.
NOTE: THE EFFECTIVE DATE IS USUALLY THE FIRST
DAY OF THE PLAN YEAR IN WHICH THIS ADOPTION
AGREEMENT IS SIGNED.
SECTION 3. RELEVANT TIME PERIODS COMPLETE PARTS A THROUGH C
PART A. Employer's Fiscal Year:
The Employer's fiscal year ends (SPECIFY MONTH AND
DATE)_________________________________________
PART B. Plan Year Means:
OPTION 1: [ ] The 12-consecutive month period which
coincides with the Employer's fiscal year.
OPTION 2: [ ] The calendar year.
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OPTION 3: [ ] Other 12-consecutive month period.
(SPECIFY)____________________________________
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
If the initial Plan Year is less than 12 months (a short Plan
Year) specify such Plan Year's beginning and ending
dates____________________________________________________________
PART C. Limitation Year Means:
OPTION 1: [ ] The Plan Year.
OPTION 2: [ ] The calendar year.
OPTION 3: [ ] Other 12-consecutive month period.
(SPECIFY)_______________________________________
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 4. ELIGIBILITY REQUIREMENTS COMPLETE PARTS A THROUGH F
PART A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan
after completing ___________ (ENTER 0, 1, 2 OR ANY FRACTION
LESS THAN 2) Years of Eligibility Service.
NOTE: IF MORE THAN 1 YEAR IS SELECTED, THE IMMEDIATE 100%
VESTING SCHEDULE OF SECTION 8 WILL AUTOMATICALLY APPLY. IF LEFT
BLANK, THE YEARS OF ELIGIBILITY SERVICE REQUIRED WILL BE DEEMED
TO BE 0. IF A FRACTION IS SELECTED, AN EMPLOYEE WILL NOT BE
REQUIRED TO COMPLETE ANY SPECIFIED NUMBER OF HOURS OF SERVICE TO
RECEIVE CREDIT FOR A FRACTIONAL YEAR. IF A SINGLE ENTRY DATE IS
SELECTED IN SECTION 4, PART F, THE YEARS OF ELIGIBILITY SERVICE
REQUIRED CANNOT EXCEED 1 1/2.
PART B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan
after attaining age ___________ (NO MORE THAN 21).
NOTE: IF LEFT BLANK, IT WILL BE DEEMED THERE IS NO AGE
REQUIREMENT FOR ELIGIBILITY. IF A SINGLE ENTRY DATE IS
SELECTED IN SECTION 4, PART F, THE AGE REQUIRED CANNOT EXCEED 20
1/2.
PART C. Employees Employed As of Effective Date:
Will all Employees employed as of the Effective Date of this Plan
who have not otherwise met the Years of Eligibility Service and
age requirements specified above be considered to have met those
requirements as of the Effective Date? [ ] Yes [ ] No
NOTE: IF A BOX IS NOT CHECKED, "NO" WILL BE DEEMED TO BE
SELECTED.
Part D. Exclusion of Certain Classes of Employees:
All Employees shall be eligible to become a Participant in the
Plan, except those checked below:
1. [ ] Those Employees included in a unit of Employees covered
by a collective bargaining agreement between the
Employer and Employee representatives, if retirement
benefits were the subject of good faith bargaining and
if two percent or less of the Employees who are covered
pursuant to that agreement are professionals as defined
in Section 1.410(b)-9 of the regulations. For this
purpose, the term "employee representatives" does not
include any organization more than half of whose
members are Employees who are owners, officers, or
executives of the Employer.
2. [ ] Those Employees who are non-resident aliens (within the
meaning of Section 7701(b)(1)(B) of the Code) and who
received no earned income (within the meaning of
Section 911(d)(2) of the Code) from the Employer which
constitutes income from sources within the United
States (within the meaning of Section 861(a)(3) of the
Code).
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PART E. Hours Required For Eligibility Purposes:
1. ________ Hours of Service (NO MORE THAN 1,000) shall be required
to constitute a Year of Eligibility Service.
2. ________ Hours of Service (NO MORE THAN 500 BUT LESS THAN THE
NUMBER SPECIFIED IN SECTION 4, PART E, ITEM 1, ABOVE) must be
exceeded to avoid a Break in Eligibility Service.
3. For purposes of determining Years of Eligibility Service,
Employees shall be given credit for Hours of Service with the
following predecessor employer(s) (COMPLETE IF
APPLICABLE)____________________
_________________________________________________________________
PART F. Entry Dates:
The Entry Dates for participation shall be (CHOOSE ONE):
OPTION 1: [ ] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
OPTION 2: [ ] Other (SPECIFY)___________________________________
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED. OPTION 2 CAN BE SELECTED ONLY IF THE ELIGIBILITY
REQUIREMENTS AND ENTRY DATES ARE COORDINATED SUCH THAT EACH
EMPLOYEE WILL BECOME A PARTICIPANT IN THE PLAN NO LATER THAN THE
EARLIER OF: (1) THE FIRST DAY OF THE PLAN YEAR BEGINNING AFTER
THE DATE THE EMPLOYEE SATISFIES THE AGE AND SERVICE REQUIREMENTS
OF SECTION 410(A) OF THE CODE; OR (2) 6 MONTHS AFTER THE DATE THE
EMPLOYEE SATISFIES SUCH REQUIREMENTS.
SECTION 5. METHOD OF DETERMINING SERVICE COMPLETE PART A OR B
PART A. Hours of Service Equivalencies:
Service will be determined on the basis of the method selected
below. Only one method may be selected. The method selected
will be applied to all Employees covered under the Plan.
(CHOOSE ONE):
OPTION 1. [ ] On the basis of actual hours for which an Employee
is paid or entitled to payment.
OPTION 2. [ ] On the basis of days worked. An Employee will be
credited with 10 Hours of Service if under Section
1.24 of the Plan such Employee would be credited
with at least 1 Hour of Service during the day.
OPTION 3. [ ] On the basis of weeks worked. An Employee will be
credited with 45 Hours of Service if under Section
1.24 of the Plan such Employee would be credited
with at least 1 Hour of Service during the week.
OPTION 4. [ ] On the basis of months worked. An Employee will
be credited with 190 Hours of Service if under
Section 1.24 of the Plan such Employee would be
credited with at least 1 Hour of Service during
the month.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO
BE SELECTED. THIS SECTION 5, PART A WILL NOT APPLY IF THE
ELAPSED TIME METHOD OF SECTION 5, PART B IS SELECTED.
PART B. Elapsed Time Method:
In lieu of tracking Hours of Service of Employees, will the
elapsed time method described in Section 2.07 of the Plan be
used? (CHOOSE ONE)
OPTION 1: [ ] No
OPTION 2: [ ] Yes
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO
BE SELECTED.
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SECTION 6. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA COMPLETE PARTS A, B
AND C
PART A. Contribution Formula:
For each Plan Year the Employer will contribute an Amount to be
determined from year to year.
PART B. Allocation Formula (CHOOSE ONE):
OPTION 1: [ ] Pro Rata Formula. Employer Profit Sharing
Contributions shall be allocated to the Individual
Accounts of Qualifying Participants in the ratio
that each Qualifying Participant's Compensation
for the Plan Year bears to the total Compensation
of all Qualifying Participants for the Plan Year.
OPTION 2: [ ] Integrated Formula. Employer Profit Sharing
Contributions shall be allocated as follows (START
WITH STEP 3 IF THIS PLAN IS NOT A TOP-HEAVY PLAN):
Step 1. Employer Profit Sharing Contributions shall
first be allocated pro rata to Qualifying
Participants in the manner described in
Section 6, Part B, Option 1. The percent so
allocated shall not exceed 3% of each
Qualifying Participant's Compensation.
Step 2. Any Employer Profit Sharing Contributions
remaining after the allocation in Step 1
shall be allocated to each Qualifying
Participant's Individual Account in the ratio
that each Qualifying Participant's
Compensation for the Plan Year in excess of
the integration level bears to all Qualifying
Participants' Compensation in excess of the
integration level, but not in excess of 3%.
Step 3. Any Employer Profit Sharing Contributions
remaining after the allocation in Step 2
shall be allocated to each Qualifying
Participant's Individual Account in the ratio
that the sum of each Qualifying Participant's
total Compensation and Compensation in excess
of the integration level bears to the sum of
all Qualifying Participants' total
Compensation and Compensation in excess of
the integration level, but not in excess of
the profit sharing maximum disparity rate as
described in Section 3.01(B)(3) of the Plan.
Step 4. Any Employer Profit Sharing Contributions
remaining after the allocation in Step 3
shall be allocated pro rata to Qualifying
Participants in the manner described in
Section 6, Part B, Option 1.
The integration level shall be (CHOOSE ONE):
SUBOPTION (A): [ ] The Taxable Wage Base.
SUBOPTION (B): [ ] $________ (A DOLLAR AMOUNT
LESS THAN THE TAXABLE WAGE
BASE).
SUBOPTION (C): [ ] ______% (NOT MORE THAN 100%)
of the Taxable Wage Base.
NOTE: IF NO OPTION IS SELECTED, SUBOPTION (A)
WILL BE DEEMED TO BE SELECTED.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE
DEEMED TO BE SELECTED.
PART C. Qualifying Participants:
A Participant will be a Qualifying Participant and thus entitled
to share in the Employer Profit Sharing Contribution for any Plan
Year only if the Participant is a Participant on at least one day
of such Plan Year and satisfies the following additional
conditions (CHECK ONE OR MORE OPTIONS):
OPTION 1: [ ] No Additional Conditions.
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OPTION 2: [ ] Hours of Service Requirement. The Participant
completes at least ______ (NOT MORE THAN 500)
Hours of Service during the Plan Year. However,
this condition will be waived for the following
reasons (CHECK AT LEAST ONE):
[ ] The Participant's Death.
[ ] The Participant's Termination of Employment
after having incurred a Disability.
[ ] The Participant's Termination of Employment
after having reached Normal Retirement Age.
[ ] This condition will not be waived.
NOTE: IF NO OPTION IS SELECTED, OPTION 1
WILL BE DEEMED TO BE SELECTED.
SECTION 7. COMPENSATION COMPLETE PARTS A THROUGH D
PART A. Basic Definition:
Compensation will mean all of each Participant's (CHOOSE ONE):
OPTION 1: [ ] W-2 wages.
OPTION 2: [ ] Section 3401(a) wages.
OPTION 3: [ ] 415 safe-harbor compensation.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
PART B. Measuring Period for Compensation:
Compensation shall be determined over the following applicable
period (CHOOSE ONE):
OPTION 1: [ ] The Plan Year.
OPTION 2: [ ] The calendar year ending with or within the
Plan Year.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
PART C. Inclusion of Elective Deferrals:
Does Compensation include Employer Contributions made pursuant
to a salary reduction agreement which are not includible in the
gross income of the Employee under Sections 125, 402(e)(3),
402(h)(1)(B), and 403(b) of the Code? [ ] Yes [ ] No
NOTE: IF NEITHER BOX IS CHECKED, "YES" WILL BE DEEMED TO BE
SELECTED.
PART D. Pre-Entry Date Compensation:
For the Plan Year in which an Employee enters the Plan, the
Employee's Compensation which shall be taken into account for
purposes of the Plan shall be (CHOOSE ONE):
OPTION 1: [ ] The Employee's Compensation only from the time the
Employee became a Participant in the Plan.
OPTION 2: [ ] The Employee's Compensation for the whole of such
Plan Year.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
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SECTION 8. VESTING AND FORFEITURES COMPLETE PARTS A THROUGH D
PART A. Vesting Schedule. A Participant shall become Vested in his or
her Individual Account as follows (CHOOSE ONE):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (COMPLETE IF CHOSEN)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
</TABLE>
NOTE: IF NO OPTION IS SELECTED, OPTION 3 WILL BE DEEMED TO BE SELECTED.
- -------------------------------------------------------------------------------
PART B. Hours Required For Vesting Purposes:
1. ________ Hours of Service (NO MORE THAN 1,000) shall be
required to constitute a Year of Vesting Service.
2. ________ Hours of Service (NO MORE THAN 500 BUT LESS THAN
THE NUMBER SPECIFIED IN SECTION 8, PART B, ITEM 1, ABOVE) must
be exceeded to avoid a Break in Vesting Service.
3. For purposes of determining Years of Vesting Service,
Employees shall be given credit for Hours of Service with the
following predecessor employer(s) (COMPLETE IF APPLICABLE)
______________________________________________________________
PART C. Exclusion of Certain Years of Vesting Service:
All of an Employee's Years of Vesting Service with the Employer
are counted to determine the vesting percentage in the
Participant's Individual Account except (CHECK ANY THAT APPLY):
[ ] Years of Vesting Service before the Employee reaches
age 18.
[ ] Years of Vesting Service before the Employer maintained
this Plan or a predecessor plan.
PART D. Allocation of Forfeitures:
Forfeitures shall be (CHOOSE ONE):
OPTION 1: [ ] Allocated to the Individual Accounts of the
Participants specified below in the manner
as described in Section 6, Part B (for
Employer Profit Sharing Contributions).
The Participants entitled to receive
allocations of Forfeitures shall be (CHOOSE
ONE):
SUBOPTION (a): [ ] Only Qualifying
Participants.
SUBOPTION (b): [ ] All Participants.
NOTE: IF NO OPTION IS SELECTED, SUBOPTION (a) WILL BE
DEEMED TO BE SELECTED.
OPTION 2: [ ] Applied to reduce Employer Profit Sharing
Contributions (CHOOSE ONE):
SUBOPTION (a): [ ] For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (b): [ ] For any Plan Year
subsequent to the Plan
Year for which the
Forfeiture arises.
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OPTION 3: [ ] Applied first to the payment of the Plan's
administrative expenses and any excess
applied to reduce Employer Profit Sharing
Contributions (CHOOSE ONE):
SUBOPTION (A): [ ] For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): [ ] For any Plan Year
subsequent to the Plan
Year for which the
Forfeiture arises.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 AND SUBOPTION (A) WILL
BE DEEMED TO BE SELECTED.
SECTION 9. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE
PART A. The Normal Retirement Age under the Plan shall be (CHECK AND
COMPLETE ONE OPTION):
OPTION 1: [ ] Age 65.
OPTION 2: [ ] Age ________ (NOT TO EXCEED 65).
OPTION 3: [ ] The later of age ________ (NOT TO EXCEED 65) or
the ________ (NOT TO EXCEED 5TH) anniversary of
the first day of the first Plan Year in which the
Participant commenced participation in the Plan.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
PART B. Early Retirement Age (CHOOSE ONE OPTION):
OPTION 1: [ ] An Early Retirement Age is not applicable under
the Plan.
OPTION 2: [ ] Age ______ (NOT LESS THAN 55 NOR MORE THAN 65).
OPTION 3: [ ] A Participant satisfies the Plan's Early
Retirement Age conditions by attaining age
________ (NOT LESS THAN 55) and completing
________ Years of Vesting Service.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO BE
SELECTED.
SECTION 10. DISTRIBUTIONS
Distributable Events. Answer each of the following items.
A. Termination of Employment Before Normal Retirement Age. May a
Participant who has not reached Normal Retirement Age request a
distribution from the Plan upon Termination of
Employment? [ ] Yes [ ] No
B. Disability. May a Participant who has incurred a Disability
request a distribution from the Plan?
[ ] Yes [ ] No
C. Attainment of Normal Retirement Age. May a Participant who has
attained Normal Retirement Age but has not incurred a
Termination of Employment request a distribution from the Plan?
[ ] Yes [ ] No
D. In-Service Withdrawals. Will Participants be permitted to
request a distribution during service pursuant to Section
6.01(A)(3) of the Plan? [ ] Yes [ ] No
E. Hardship Withdrawals. Will Participants be permitted to make
hardship withdrawals pursuant to Section 6.01(A)(4) of the Plan?
[ ] Yes [ ] No
F. Withdrawals of Rollover or Transfer Contributions. Will
Employees be permitted to withdraw their Rollover or Transfer
Contributions at any time? [ ] Yes [ ] No
NOTE: IF A BOX IS NOT CHECKED FOR AN ITEM, "YES" WILL BE DEEMED
TO BE SELECTED FOR THAT ITEM. SECTION 411(D)(6) OF THE CODE
PROHIBITS THE ELIMINATION OF PROTECTED BENEFITS. IN GENERAL,
PROTECTED BENEFITS INCLUDE THE FORMS AND TIMING OF PAYOUT
OPTIONS. IF THE PLAN IS BEING ADOPTED TO AMEND AND REPLACE A
PRIOR PLAN THAT PERMITTED A DISTRIBUTION OPTION DESCRIBED ABOVE,
YOU MUST ANSWER "YES" TO THAT ITEM.
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SECTION 11. JOINT AND SURVIVOR ANNUITY
PART A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan
apply? (CHOOSE ONLY ONE OPTION)
OPTION 1: [ ] Yes.
OPTION 2: [ ] No.
NOTE: YOU MUST SELECT "NO" IF YOU ARE ADOPTING THIS PLAN AS AN
AMENDMENT AND RESTATEMENT OF A PRIOR PLAN THAT WAS SUBJECT TO THE
JOINT AND SURVIVOR ANNUITY REQUIREMENTS.
PART B. Survivor Annuity Percentage: (COMPLETE ONLY IF YOUR ANSWER IN
SECTION 11, PART A IS "NO.")
The survivor annuity portion of the Joint and Survivor Annuity
shall be a percentage equal to ____% (AT LEAST 50% BUT NO MORE
THAN 100%) of the amount paid to the Participant prior to his or
her death.
SECTION 12. OTHER OPTIONS ANSWER "YES" OR "NO" TO EACH OF THE FOLLOWING
QUESTIONS BY CHECKING THE APPROPRIATE BOX. IF A BOX IS NOT
CHECKED FOR A QUESTION, THE ANSWER WILL BE DEEMED TO BE "NO."
A. Loans: Will loans to Participants pursuant to Section 6.08 of
the Plan be permitted? [ ] Yes [ ] No
B. Insurance: Will the Plan allow for the investment in insurance
policies pursuant to Section 5.13 of the Plan?
[ ] Yes [ ] No
C. Employer Securities: Will the Plan allow for the investment in
qualifying Employer securities or qualifying Employer real
property? [ ] Yes [ ] No
D. Rollover Contributions: Will Employees be permitted to make
rollover contributions to the Plan pursuant to Section 3.03 of
the Plan? [ ] Yes [ ] No
[ ] Yes, but only after becoming a Participant.
E. Transfer Contributions: Will Employees be permitted to make
transfer contributions to the Plan pursuant to Section 3.04 of
the Plan? [ ] Yes [ ] No
[ ] Yes, but only after becoming a Participant.
F. Will Participants be permitted to direct the investment of their
Plan assets pursuant to Section 5.14 of the Plan?
[ ] Yes [ ] No
SECTION 13. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan (other
than a paired standardized money purchase pension plan using the
same Basic Plan Document as this Plan) in which any Participant
in this Plan is (or was) a Participant or could become a
Participant, you must complete this section. You must also
complete this section if you maintain a welfare benefit fund, as
defined in Section 419(e) of the Code, or an individual medical
account, as defined in Section 415(l)(2) of the Code, under which
amounts are treated as annual additions with respect to any
Participant in this Plan.
PART A. Individually Designed Defined Contribution Plan:
If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through 3.05(B)(6)
of the Plan will apply as if the other plan were a
master or prototype plan.
2. [ ] Other method. (PROVIDE THE METHOD UNDER WHICH THE PLANS
WILL LIMIT TOTAL ANNUAL ADDITIONS TO THE MAXIMUM
PERMISSIBLE AMOUNT, AND WILL PROPERLY REDUCE ANY EXCESS
AMOUNTS, IN A MANNER THAT PRECLUDES EMPLOYER
DISCRETION.)___________________________________________
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PART B. Defined Benefit Plan:
If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will
provide below the language which will satisfy the 1.0 limitation
of Section 415(e) of the Code.
1. [ ] If the projected annual addition to this Plan to the
account of a Participant for any limitation year would
cause the 1.0 limitation of Section 415(e) of the Code
to be exceeded, the annual benefit of the defined
benefit plan for such limitation year shall be reduced
so that the 1.0 limitation shall be satisfied.
If it is not possible to reduce the annual benefit of
the defined benefit plan and the projected annual
addition to this Plan to the account of a Participant
for a limitation year would cause the 1.0 limitation to
be exceeded, the Employer shall reduce the Employer
Contribution which is to be allocated to this Plan on
behalf of such Participant so that the 1.0 limitation
will be satisfied. (The provisions of Section 415(e)
of the Code are incorporated herein by reference under
the authority of Section 1106(h) of the Tax Reform Act
of 1986.)
2. [ ] Other method. (PROVIDE LANGUAGE DESCRIBING ANOTHER
METHOD. SUCH LANGUAGE MUST PRECLUDE EMPLOYER
DISCRETION.)___________________________________________
SECTION 14. TOP-HEAVY MINIMUM COMPLETE PARTS A AND B
PART A. Minimum Allocation or Benefit:
For any Plan Year with respect to which this Plan is a Top-Heavy
Plan, any minimum allocation required pursuant to Section 3.01(E)
of the Plan shall be made (CHOOSE ONE):
OPTION 1: [ ] To this Plan.
OPTION 2: [ ] To the following other plan maintained by the
Employer (SPECIFY NAME AND PLAN NUMBER OF PLAN)
__________________________________________________
OPTION 3: [ ] In accordance with the method described on an
attachment to this Adoption Agreement. (ATTACH
LANGUAGE DESCRIBING THE METHOD THAT WILL BE USED
TO SATISFY SECTION 416 OF THE CODE. SUCH METHOD
MUST PRECLUDE EMPLOYER DISCRETION.)
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE
DEEMED TO BE SELECTED.
PART B. Top-Heavy Vesting Schedule:
Pursuant to Section 6.01(C) of the Plan, the vesting schedule
that will apply when this Plan is a Top-Heavy Plan (unless the
Plan's regular vesting schedule provides for more rapid vesting)
shall be (CHOOSE ONE):
OPTION 1: [ ] 6 Year Graded.
OPTION 2: [ ] 3 Year Cliff.
NOTE: IF NO OPTION IS SELECTED, OPTION 1 WILL BE DEEMED TO
BE SELECTED.
SECTION 15. PROTOTYPE SPONSOR
Name of Prototype Sponsor___________________________________________
Address_____________________________________________________________
Telephone Number____________________________________________________
PERMISSIBLE INVESTMENTS
The assets of the Plan shall be invested only in those investments
described below (TO BE COMPLETED BY THE PROTOTYPE SPONSOR):
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
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SECTION 16. TRUSTEE OR CUSTODIAN
OPTION A. [ ] Financial Organization as Trustee or
Custodian
CHECK ONE: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
Financial Organization_______________________________________________
Signature____________________________________________________________
Type Name____________________________________________________________
COLLECTIVE OR COMMINGLED FUNDS
List any collective or commingled funds maintained by the financial
organization Trustee in which assets of the Plan may be invested
(COMPLETE IF APPLICABLE).
____________________________________________________________________
____________________________________________________________________
OPTION B. [ ] Individual Trustee(s)
Signature ____________________ Type Name_____________________
Signature_____________________ Type Name_____________________
Signature ____________________ Type Name_____________________
Signature_____________________ Type Name_____________________
SECTION 17. RELIANCE
An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in Section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for key employees, as defined in Section 419A(d)(3)
of the Code, or an individual medical account, as defined in Section
415(l)(2) of the Code) in addition to this Plan (other than a paired
standardized money purchase pension plan using the same Basic Plan
Document as this Plan) may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as evidence that
this Plan is qualified under Section 401 of the Internal Revenue
Code. If the Employer who adopts or maintains multiple plans wishes
to obtain reliance that his or her plan(s) are qualified, application
for a determination letter should be made to the appropriate Key
District Director of Internal Revenue.
The Employer may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code unless the terms of the Plan,
as herein adopted or amended, that pertain to the requirements of
Sections 401(a)(4), 401(a)(17), 401(l), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986, or later laws,
(a) are made effective retroactively to the first day of the first
Plan Year beginning after December 31, 1988 (or such later date on
which these requirements first become effective with respect to this
Plan); or (b) are made effective no later than the first day on which
the Employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and the
prior provisions of the Plan constitute such an interpretation.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 04.
SECTION 18. EMPLOYER SIGNATURE IMPORTANT: PLEASE READ BEFORE SIGNING.
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer___________________________________
Date Signed______________________
Type Name______________________________________
Title____________________________
<PAGE>
APPLICATION FORM FOR KEOGH PLAN
PLEASE COMPLETE AND MAIL TO:
[Logo] FARM BUREAU MUTUAL FUNDS
FARM BUREAU MUTUAL FUNDS BOX 9194
DES MOINES, IOWA 50306-9194
- --------------------------------------------------------------------------------
FUND SELECTION / / FBL MONEY MARKET FUND $
----------------------
- --------------------------------------------------------------------------------
FBL SERIES FUND*
/ / MONEY MARKET $ / / HIGH GRADE BOND $
-------- --------
/ / GROWTH COMMON STOCK $ / / BLUE CHIP $
-------- --------
/ / HIGH YIELD BOND $ / / MANAGED $
-------- --------
TOTAL INVESTMENT $ -----------
*If no Portfolio is designated, the Money Market Portfolio will be selected.
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
EMPLOYER NAME
-------------------------------------------------------------------
(firm name, if applicable)
ADDRESS
-------------------------------------------------------------------------
STREET CITY-TOWN STATE ZIP CODE
EMPLOYER TAX I.D.# DATE OF BIRTH
--------------------- -----------------------
OR SOCIAL SECURITY # MONTH DAY YEAR
- --------------------------------------------------------------------------------
BENEFICIARY INFORMATION
- --------------------------------------------------------------------------------
DESIGNATED BENEFICIARY SOCIAL SECURITY # DATE OF BIRTH
PRIMARY: ---------------------- --------------- -----------------
CONTINGENT: ---------------------- --------------- -----------------
- --------------------------------------------------------------------------------
CUSTODIAN & CUSTODY FEES
- --------------------------------------------------------------------------------
In accordance with the terms of the Custodial Agreement, the custodial fee is
stated in the current Designated Fund Statement of Additional Information, the
fee for each year (or any part of a Plan Year) will be deducted from all
Participant's accounts, including those Participants receiving periodic
distributions under the Plan and including any Owner-Employee whose account is
being held by the Custodian after termination of the Plan and before
distribution.
ACCEPTED BY: INVESTORS FIDUCIARY TRUST COMPANY ("IFTC"), OF KANSAS CITY, MO.
BY: DATE:
------------------------------------------- ---------------------
(FBL INVESTMENT ADVISORY SERVICES, INC. AS AGENT FOR IFTC)
- --------------------------------------------------------------------------------
APPOINTMENT OF CUSTODIAN & PLAN ACCEPTANCE BY EMPLOYER
- --------------------------------------------------------------------------------
The Employer hereby establishes a plan and trust upon the respective terms and
conditions contained in the Farm Bureau Prototype Paired Defined Contribution
Plan (the "Plan") and Trust Agreement. The Employer hereby acknowledges receipt
of the Plan, appropriate Adoption Agreement and annexed Trust Agreement,
Custodial Agreement and other prospectus(es). The Employer further acknowledges
that the appropriate Adoption Agreement has been executed and appoints Investors
Fiduciary Trust Company of Kansas City, MO as Custodian. The Employer shall be
deemed "Named Fiduciary", "Trustee" and "Plan Administrator".
Signatures:
- -------------------------------- ---------------------
Employer or Partner Date
- -------------------------------- --------------------- ---------------
Registered Representative Date Reg. Rep. #
Retain the attached Custodial EXCHANGE BETWEEN PORTFOLIOS*
Agreement for your records. / / Yes / / No
I authorize exchanges between Portfolios upon
instruction from any person by telephone. If
neither box is checked, the telephone exchange
privilege will be provided. Shares held in
certificated form may not be exchanged.
*Subject to $5.00 service charge per exchange.
737-924 (11-91)
<PAGE>
THIS AGREEMENT shall become effective upon its acceptance in writing by the bank
or its agent designated in the Application Form attached hereto of its
appointment to serve as Custodian in accordance with the terms of this
agreement.
SECTION 1 - ESTABLISHMENT OF ACCOUNT
C1.1 Establishment of Custodial and Participant's Account. The Custodian
shall open and maintain a Custodial Account, and as a part
thereof, Participants' Accounts, for such individuals as the
Employer has set forth in the Application Form and the
Employer shall from time to time certify to it as
Participants in the Plan.
The Employer shall promptly notify the custodian in writing
of any change in the name or address or change in employment
status, where pertinent, of any Participant. The
Participants' Accounts shall be kept in a manner which will
permit an accurate determination of the contributions
hereafter made by the Employer and of the voluntary
contribution, if any, hereafter made by the Participants.
SECTION 2 - RECEIPT OF CONTRIBUTIONS
C2.1 The Custodian shall accept and hold in the Custodial Account such
contributions of money on behalf of the Participants as it
may receive from time to time from the Employer. All such
contributions shall be accompanied by written instructions
from the Employer specifying the Participant's Account to
which they are to be credited and shall be so credited upon
receipt. Such instructions shall also specify the portion
of the amount to be so credited which is derived from Employer
Contributions and Participant's voluntary contributions. The
Custodian shall be fully protected in acting on such instructions.
The minimum initial contribution for this Custodial Account
which the Custodian shall be required to accept shall be as
established in the Designated Fund's prospectus.
SECTION 3 - INVESTMENT OF ACCOUNT ASSETS
C3.1 The amount of each contribution credited to a Participant's Account
shall be applied to the purchase of full and fractional
shares of the Designated Fund (Fund Shares) as heretofore
directed by the Employer in the application form attached
hereto from FBL Investment Advisory Services, Inc.
(Management Company), the exclusive distributor for such
Fund Shares, and the shares so purchased shall be credited to
such account. Such purchases shall be made daily on the date
such contributions are received provided shares of the Designated
Fund are offered for sale on that day; otherwise, on the
next following business day on which such shares are offered
for sale.
C3.2 All dividends and capital gains distributions received on the Fund
Shares held in each Participant's Account shall be reinvested in
full and fractional shares of the Designated Fund.
C3.3 All Fund shares acquired by the Custodian shall be registered
in the name of the Custodian or of its registered nominee
as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder exempting such
transactions from liability for stock transfer taxes, but the
beneficial ownership thereof shall be deemed vested in the
Participant for whose account the shares are credited.
SECTION 4 - DISTRIBUTIONS FROM THE CUSTODIAL ACCOUNT
C4.1 When a Participant's benefit becomes payable pursuant to the Plan the
Employer shall certify that such benefit is payable and the
Custodian or its Agent shall as soon as practicable
thereafter distribute such amount in accordance with the
terms and conditions of such instructions which shall contain
all information necessary for the Custodian or its Agent to
make such distribution; such Employer represents and warrants
that such instructions shall at all times be in accordance with
the provisions of the Plan. In the event of the death of a
Participant before full distribution of his account, the amount
credited to his account shall be distributed in kind or in cash
in the sole discretion of the Custodian in accordance with the
terms and in the manner provided in the Plan. The Employer may
furnish written instructions to the Custodian or its Agent
specifying a method of payment as provided in the Plan prior
to the date a benefit becomes distributable, and the last
such instructions received by the Custodian or its Agent
shall control unless superseded by written instructions
accompanying the instructions directing distribution of a
benefit.
C4.2 Anything herein to the contrary notwithstanding, if the Custodian
should at any time receive notice (by certified or registered mail)
from the Internal Revenue Service that any contributions made by or on
behalf of a Participant was an excess contribution, the Custodian
shall, on or before the close of the six-month period beginning with
the date of such notice, distribute to such Participant from his
Account, Fund Shares equal in value to the net amount of such excess
contribution and the net income attributable thereto; except that the
Custodian shall, if the Employer within sixty days of the date of such
notice so directs in writing and if there has been no notice to the
Custodian of a determination by the Internal Revenue Service that the
excess contribution by or on behalf of a Participant was willfully
made, credit such amount or such portion thereof as the Employer shall
direct as a contribution for such Participant for the then current
taxable year.
SECTION 5
C5.1 The Custodian or its Agent shall deliver all notices, prospectus,
financial statements, proxies and proxy solicitation
material relating to the Fund Shares held hereunder and
shall deliver same to the beneficial owners. The beneficial
owner shall vote and sign such proxies which represent his
investment held by the Custodian.
SECTION 6 - REPORTS OF THE CUSTODIAN AND EMPLOYER
C6.1 The Custodian or its Agent shall keep accurate and detailed records of
all receipts, investments, disbursements and all other
transactions required to be performed hereunder. At the
request of the Employer the Custodian or its Agent will,
within sixty days after the close of each Plan year, furnish
to the Employer a statement of the transactions mentioned
herein.
Within sixty days after the Custodian's resignation or removal
pursuant to Section 10 hereof, the Custodian or its Agent will upon
request furnish a statement reflecting the current balance and
transactions which have been transpired since the previous statement
furnished to the Employer.
SECTION 7 - CUSTODIAN'S FEES AND EXPENSES OF THE ACCOUNT
C7.1 Any income, gift, estate and inheritance taxes or other tax of any
kind whatsoever that may be levied or assessed upon or in respect of
the Custodial Account (other than transfer taxes) shall be paid from
the assets of the Custodial Account and shall, unless allocable to the
Accounts of specific Participants, be charged proportionately to the
Participant's respective accounts. The Custodian may, at its option,
collect any amounts so charged from the amount of any contribution or
earnings to be credited to the Custodial Account or by sale or
liquidation of the assets credited to such account and if the assets
of such accounts are insufficient to satisfy such charges, the
Employer shall pay any deficit therein to the Custodian. Any transfer
taxes incurred by the Custodian in connection with the investment and
reinvestment or transfer of the assets of the Custodial Account and
all other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered
to the Custodian and compensation to the Custodian, shall be charged
to and paid by the Employer or may, at the Custodian's option, be
collected by the Custodian from the amount of any contribution or
earnings to be credited to the Custodial Account or by sale or
liquidation of the assets credited to such account in which event such
amounts shall, unless allocable to the accounts of specific
Participants, be charged proportionally to the Participants'
respective accounts. Until otherwise changed in accordance with the
terms of the Custodial Agreement, the Custodian shall receive fees for
its services in respect to each Participant's account as provided in
the current Designated Fund prospectus.
SECTION 8 - CONCERNING THE CUSTODIAN
C8.1 The Custodian shall not be responsible in any way for the collection
of contributions provided for under the Plan, the purpose or propriety
of any distribution made pursuant to Section 4 hereof, or any other
action or nonaction taken pursuant to the Employer's direction nor
shall the Custodian have any duty or responsibility to determine
whether information furnished to it by the Employer is correct. The
Employer (and his or their legal representatives, heirs, successors,
or assigns) shall at all times fully indemnify and save harmless the
Custodian, its successors and assigns, from any liability arising
from any and all personal liability arising from distributions made or
actions taken at the Employer's discretion, and from any and all other
liability whatsoever which may arise in connection with this agreement
except the obligation of the Custodian to perform the things to be
done by it under this Agreement. The
<PAGE>
Custodian shall be under no duty to take any action other than as
herein specified with respect to the Custodial Account unless the
Employer shall furnish the Custodian with instructions in proper form
and such instructions shall have been specifically agreed to by the
Custodian in writing to do so and shall have been fully idemnified to
the satisfaction of the Custodian. The Custodian shall be under no
duty 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 the Employer or any other notice,
request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed (including
designation of beneficiary received from Participants), 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 a
Participant, the Custodian or its Agent shall be furnished with such
certified death certificates, inheritance tax releases and other
documents as may be required by the Custodian, and with such indemnity
agreement as the Custodian may then request. No amendment of the Plan
shall place any greater burden on the Custodian without his written
consent. The Custodian shall not be liable for interest on any cash
or cash balances maintained in the Custodial Account. The Employer
shall have the sole authority to enforce this agreement on behalf of
any and all persons having or claiming any interest in the Custodial
Agreement by virtue of this agreement or the Plan. To protect the
Custodial Account from the expenses which might otherwise be incurred,
it is imposed as a condition to the acquisition of any interest in the
Custodial Account, and is hereby agreed, that no person other than the
Employer may institute or maintain any action or proceeding against
the Custodian in the abscence of written authority from the Employer
or a determination of a court of competent jurisdiction that in
refusing authority the Employer has acted fraudulently or in bad
faith.
SECTION 9 - AMENDMENT
C9.1 The Custodian reserves the right to amend this agreement including the
fee schedule set forth in the Designated Fund prospectus in any
respect provided, however, except pursuant to Section 15 hereof, under
no circumstances shall any part of the assets of the Custodial Account
revert to the Employer (other than in his capacity as Owner-Employee
under the Plan) or be used for or diverted to purposes other than for
the exclusive benefit of Participants. The Employer will be notified
of any change within 60 days after the adoption of any amendment.
SECTION 10 - RESIGNATION OR REMOVAL OF CUSTODIAN
C10.1 The Custodian may resign at any time upon 30 days' notice in writing
to the Employer, and may be removed by the Employer at any time upon
30 days' notice in writing to the Custodian. Upon such resignation or
removal, the Employer shall appoint a successor custodian, which
successor shall be a "bank" as defined in Section 401(d)(1) of the
Internal Revenue Code. Upon receipt by the Custodian of written
acceptance of such appointment by the successor custodian, the
Custodian shall transfer and pay over to such successor the assets of
the Custodial Account and all records pertaining thereto. The
Custodian is authorized, however, to reserve such sum of money 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 Accout 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. If within 30 days after the Custodian's resignation or
removal the Employer has not appointed a successor custodian which has
accepted such appointment the Custodian shall, unless it elects to
terminate the Custodial Account pursuant to Section 11, appoint such
successor itself. The Custodian shall not be liable for the acts or
omissions of any successor custodian, whether or not the Custodian
makes such an appointment itself.
SECTION 11 - TERMINATION OF ACCOUNT
C11.1 The Custodian may elect to terminate the Custodial Account if within
30 days after its resignation or removal pursuant to Section 10 the
Employer has not appointed a successor custodian which has accepted
such appointment. The Custodian shall terminate the account upon
receiving written notice of:
(1) termination of the Plan by the Employer;
(2) the Employer's death, if the Employer is a sole proprietor; or
(3) termination of the partnership, if the Employer is a partnership,
unless in either of the latter two events provision is made by a
successor to the business of the Employer for the continuation of
the Plan and this agreement upon terms satisfactory to the
Custodian. Termination of the Custodial Account shall be
effected by distributing all assets thereof to the Participants
pursuant to written direction of the Employer (who represents and
warrants that such directions shall be and are in accordance with
the provisions of the Plan) or, if the Employer was a sole
proprietor who is dead, such distribution shall be effected in
such manner as determined by the Custodian, in each instance in
accordance with and subject to the provisions and limitations of
the Plan. Upon the completion of such distribution the Custodian
shall be relieved from all liability with respect to all amounts
so paid.
SECTION 12 - PROHIBITED TRANSACTIONS
C12.1 The Custodian shall not, directly or indirectly (and nothing herein
shall be construed to so require the Custodian):
(a) lend any part of the custodial account or the income of such
account to; or
(b) pay any compensation for personal services to; or
(c) make any part of its services available on a preferential basis
to; or
(d) acquire for the custodial account any property (other than cash
contributions permitted by the Plan) from, or sell any property
to:
any Employer or any Owner-Employeee who controls the trade or
business of any Employer, a member of the family of any such
Owner-Employee or a corporation controlled by any such Employer
or Owner-Employee through the ownership, directly or indirectly,
of 50% or more of the total combined voting power of all classes
of stock entitled to vote or 50% or more of the total value of
shares of all classes of stock of the corporation.
SECTION 13 - PROHIBITION OF DIVERSION
C13.1 At no time shall it be possible for any part of the assets of the
Custodial Account to be used for or diverted to purposes other than
for the exclusive benefit of Participants and their beneficiaries.
SECTION 14 - NOTICES TO EMPLOYER AND PARTICIPANTS
C14.1 Any notice from the Custodian or its Agent to the Employer or to any
Participant provided for in this agreement shall be effective if sent
by regular mail to the Employer or such Participant, as the case may
be, at his address as shown on the records of the Custodian.
SECTION 15 - INTERNAL REVENUE SERVICE APPROVAL
C15.1 The Custodial Account is established with the intent that it shall be
part of a qualified plan under Section 401 of the Internal Revenue
Code. All terms and provisions contained herein shall therefore be
interpreted, whenever possible, so as to be in compliance with the
requirements of qualification under such Code. The Custodian is
authorized, however, to reserve such sum of money 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.
SECTION 16 - INALIENABILITY OF BENEFITS
C16.1 The Benefits provided in the Plan shall not be subject to alienation,
assignment, garnishment, attachment, execution or levy of any kind and
any attempt to cause such benefits to be so subjected shall not be
recognized, except by the Custodian for its fees and expenses under
this Custodial Agreement and except to such extent as may be required
by law.
SECTION 17 - GOVERNING LAWS
C17.1 This agreement and Designations of Beneficiary, and all property
rights, including rights to distributions after the death of a
Participant, under the Plan, shall be construed in accordance with
the laws of the State of Iowa.
<PAGE>
<TABLE>
<CAPTION>
Form 5305-A Individual Retirement Custodial Account DO NOT File
(Rev. October 1992) with the
(Under Section 408(a) of the Internal Revenue Code) Internal
Department of the Treasury Revenue Service
Internal Revenue Service
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Name of depositor Date of birth of depositor Identifying number (see instructions)
- ------------------------------------------------------------------------------------------------------------------------------------
Address of depositor
Check if Amendment / /
- ------------------------------------------------------------------------------------------------------------------------------------
Name of custodian Address or principal place of business of custodian
Investors Fiduciary Trust Company Kansas City, Missouri
- ------------------------------------------------------------------------------------------------------------------------------------
The Depositor whose name appears above is establishing an individual retirement account under section 408(a) to provide
for his or her retirement and for the support of his or her beneficiaries after death.
The Custodian named above has given the Depositor the disclosure statement required under Regulations section
1.408-6.
The Depositor assigned the custodial account______________________________dollars ($_____________________) in cash.
The Depositor and the Custodian make the following agreement:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 403(d)(3), or an employer
contribution to a simplified employee pension plan as described in
section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) (except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date. (April 1
following the calendar year end in which the Depositor reaches age 70 1/2).
By that date, the Depositor may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
- --------------------------------------------------------------------------------
Cat. No. 11820G Form 5305-A (Rev. 10-92)
<PAGE>
Form 5305-A (Rev. 10-92) Page 2
- --------------------------------------------------------------------------------
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
- --------------------------------------------------------------------------------
NOTE: THE FOLLOWING SPACE (ARTICLE VIII) MAY BE USED FOR ANY OTHER
PROVISIONS YOU WANT TO ADD. IF YOU DO NOT WANT TO ADD ANY OTHER
PROVISIONS, DRAW A LINE THROUGH THIS SPACE. IF YOU DO ADD PROVISIONS,
THEY MUST COMPLY WITH APPLICABLE REQUIREMENTS OF STATE LAW AND THE
INTERNAL REVENUE CODE.
- --------------------------------------------------------------------------------
ARTICLE VIII
Contributions to this Custody account shall be applied by the Custodian to the
purchase of shares of the designated Fund and/or Portfolio. Shares so acquired
by the custodian shall be registered in the name of Custodian or its registered
nominee but beneficially owned by the depositor for whom the investments are
made. The depositor hereby acknowledges receipt of a current prospectus of the
appropriate fund. Current Custodial fee:
$10.00/Year per account.
- --------------------------------------------------------------------------------
Depositor's signature_________________________________Date_____________________
Custodian's signature_________________________________Date_____________________
Witness________________________________________________________________________
(Use only if signature of the Depositor or the
Custodian is required to be witnessed)
- --------------------------------------------------------------------------------
GENERAL INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE UNLESS OTHERWISE NOTED.)
PURPOSE OF FORM
Form 5305-A is a model custodial account agreement that meets the requirements
of section 408(a) and has been automatically approved by the IRS. An individual
retirement account (IRA) is established after the form is fully executed by both
the individual (Depositor) and the Custodian and must be completed no later than
the due date of the individual's income tax return for the tax year (without
regard to extensions). This account must be created in the United States for the
exclusive benefit of the Depositor or his or her beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to the
extent specified in those regulations.
Do not file Form 5305-A with the IRS. Instead, keep it for your records.
For more information on IRAs, including the required disclosure you can get
from your custodian, get Pub. 590, Individual Retirement Arrangements (IRAs).
DEFINITIONS
Custodian. - The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to act
as custodian.
Depositor. - The Depositor is the person who establishes the custodial account.
IDENTIFYING NUMBER
The depositor's social security number will serve as the identification number
of his or her IRA. An employer identification number is only required for each
participant-directed IRA. An employer identification number is required for a
common fund created for IRAs.
IRA FOR NONWORKING SPOUSE
Form 5305-A may be used to establish the IRA custodial account for a nonworking
spouse.
Contributions to an IRA custodial account for a nonworking spouse must be made
to a separate IRA custodial account established by the nonworking spouse.
SPECIFIC INSTRUCTIONS
ARTICLE IV. - Distributions made under this article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the Depositor reaches age 70 1/2 to ensure that the
requirements of section 408(a)(6) have been met.
ARTICLE VIII. - Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the depositor and custodian to complete the
agreement. They may include, for example, definitions, investment powers, voting
rights, exculpatory provisions, amendment and termination, removal of the
custodian, custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the depositor, etc. Use additional pages if
necessary and attach them to this form.
NOTE: FORM 5305-A MAY BE REPRODUCED AND REDUCED IN SIZE FOR ADOPTION TO PASSBOOK
PURPOSES.
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<PAGE>
[LOGO] Department of the Treasury
INTERNAL REVENUE SERVICE
PUBLICATION 590
Cat. No. 15160x
INDIVIDUAL
RETIREMENT
ARRANGEMENTS
(IRAs)
For use in preparing 1994 Returns
[graphic: We The People]
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CONTENTS
IMPORTANT CHANGES 2
IMPORTANT REMINDERS 2
INTRODUCTION 2
CHAPTER 1 -- OVERVIEW 3
CHAPTER 2 -- WHO CAN SET UP AN IRA? 4
What Is Compensation? 4
CHAPTER 3 -- WHEN AND HOW CAN AN IRA BE SET UP? 5
Kinds of IRAs 5
Required Disclosures 6
CHAPTER 4 -- HOW MUCH CAN I CONTRIBUTE AND DEDUCT? 6
Contribution Limits 7
Deductible Contributions 8
Nondeductible Contributions 13
Tax-Free Withdrawal of Contributions 15
Comprehensive Examples 15
CHAPTER 5 -- CAN I TRANSFER RETIREMENT PLAN ASSETS? 17
Transfer From One Trustee to Another 17
Rollovers 17
Transfers Incident to Divorce 22
CHAPTER 6 -- WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA? 22
Age 59 1/2 Rule 22
Required Distributions 23
Tax Treatment of Distributions 27
CHAPTER 7 -- WHAT ACTS RESULT IN PENALTIES? 32
Prohibited Transactions 32
Excess Contributions 33
Premature Distributions 34
Excess Accumulations 35
Excess Distributions 36
Reporting Additional Taxes 36
CHAPTER 8 -- SIMPLIFIED EMPLOYEE PENSION (SEP) 37
Definitions 37
Contributions 37
Salary Reduction Arrangement 40
Distributions 40
APPENDICES 42
Appendix A - Summary Record of IRA(s) for 1994 and Worksheet for
Determining Required Annual Distributions from Your IRA(s) 43
<PAGE>
Appendix B - Worksheets for Social Security Recipients Who
Contribute to an IRA 44
Appendix C - Filled-in Form 5329 56
Appendix D - Filled-in Forms 8606 58
Appendix E - Life Expectancy and Applicable Divisor Tables 60
INDEX 66
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IMPORTANT CHANGES
SEPS -- NEW COMPENSATION LIMIT. The compensation of a participant that can be
taken into account for computing contributions to a SEP-IRA is generally limited
to $150,000 for plan years beginning on or after January 1, 1994. See
CONTRIBUTIONS in Chapter 8 for more information.
IRAS -- REVISED DEDUCTION WORKSHEETS FOR SOCIAL SECURITY RECIPIENTS. The
WORKSHEETS FOR SOCIAL SECURITY RECIPIENTS WHO CONTRIBUTE TO AN IRA in Appendix B
have been revised to take into account the effects of the new law increasing the
portion of social security benefits that are taxable.
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IMPORTANT REMINDERS
INTEREST EARNED. Although interest earned from your IRA is generally not taxed
in the year earned, it is NOT TAX-EXEMPT interest. DO NOT report it on your
return as tax-exempt interest.
PENALTY FOR FAILURE TO FILE FORM 8606. If you make nondeductible IRA
contributions and you do not file Form 8606, NONDEDUCTIBLE IRAS (CONTRIBUTIONS,
DISTRIBUTIONS, AND BASIS), with your tax return, you may have to pay a $50
penalty.
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INTRODUCTION
This publication begins with a general overview of the IRA rules and then
explains them in greater detail. The rules are for setting up an IRA,
contributing to it, transferring money or property to and from it, and making
withdrawals from it. Penalties for breaking the rules are also explained.
Worksheets, sample forms, and tables, listed under APPENDICES in the contents,
are included to help you comply with the rules. These appendices are at the
back of this publication.
RELATED PUBLICATIONS AND FORMS. This publication refers to publications and
forms that you may need. The following list of such USEFUL ITEMS does not
include Forms 1040, 1040A, or 1040EZ.
USEFUL ITEMS
You may want to see:
PUBLICATIONS
/ / 560 Retirement Plans for the Self-Employed
/ / 571 Tax-Sheltered Annuity Programs for Employees of Public Schools and
Certain Tax-Exempt Organizations
/ / 575 Pension and Annuity Income (Including Simplified General Rule)
/ / 939 Pension General Rule (Nonsimplified Method)
FORMS (AND INSTRUCTIONS)
/ / W-4P Withholding Certificate for Pension or Annuity Payments
/ / 1099-R Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
/ / 5305-SEP Simplified Employee Pension - Individual Retirement Accounts
Contribution Agreement
/ / 5305A-SEP Salary Reduction and Other Elective Simplified Employee Pension--
Individual Retirement Accounts Contribution Agreement
/ / 5329 Additional Taxes Attributable to Qualified Retirement Plans (Including
IRAs), Annuities, and Modified Endowment Contracts
/ / 5498 Individual Retirement Arrangement Information
/ / 8606 Nondeductible IRAs (Contributions, Distributions, and Basis)
/ / 8815 Exclusion of Interest From Series EE U.S. Savings Bonds Issued After
1989
- -------------------------------------------------------------------------------
FREE PUBLICATIONS AND FORMS. To order other publications and tax forms, call
our toll-free telephone number 1-800-TAX-FORM (829-3676) or write the IRS Forms
Distribution Center for your area as shown in your tax form's instructions.
TELEPHONE HELP FOR HEARING-IMPAIRED PERSONS. If you have access to TDD
equipment, you can call 1-800-829-4059 with your tax questions or to order forms
and publications. See your tax package for the hours of operation.
Page 2
<PAGE>
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1.
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OVERVIEW
This chapter contains a brief overview of the rules that apply to IRAs. You
will find the detailed coverage of the rules in the chapters that follow.
An individual retirement arrangement (IRA) is a personal savings plan that
offers you tax advantages to set aside money for your retirement. That means
that you may be able to deduct your contributions to your IRA in whole or in
part, depending on your circumstances, and that, generally, amounts in your IRA,
including earnings and gains, are not taxed until distributed to you.
You can set up an IRA with several types of organizations. Most banks and
similar savings institutions, mutual funds, stock brokerage firms, and insurance
companies offer IRAs that meet Internal Revenue Code (IRC) requirements. Not
later than the date one of them sets up an IRA for you, it must give you an IRA
disclosure statement. However, if the statement is given to you less than 7 days
before you set up (or purchase, if earlier) your IRA, you can revoke your IRA
during a period ending not less than 7 days after the day you set it up (or
purchase it, if earlier).
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WHO CAN SET UP AN IRA?
You can set up an IRA if you have taxable compensation during the year and have
not reached age 70 1/2 by the end of the year. Compensation includes wages,
salaries, tips, commissions, fees, bonuses, and taxable alimony and separate
maintenance payments.
You may also be able to set up an IRA for your spouse.
HOW CAN AN IRA BE SET UP?
You can use the following types of IRAs:
INDIVIDUAL RETIREMENT ACCOUNT. You set this up with any financial institution
that satisfies the requirements of the Internal Revenue Code.
INDIVIDUAL RETIREMENT ANNUITY. You set this up by purchasing a special annuity
contract from a life insurance company.
EMPLOYER AND EMPLOYEE ASSOCIATION TRUST ACCOUNT. Your employer, labor union, or
other employee association can set up an individual retirement account for you.
SIMPLIFIED EMPLOYEE PENSION (SEP). Under a SEP plan, your employer can set up
an individual retirement account (called a SEP-IRA) for you that generally lets
your employer contribute to it each year and deduct up to 15% of your
compensation or $30,000, whichever is less. A self-employed person is treated as
an employee for this purpose.
HOW MUCH CAN I CONTRIBUTE TO AN IRA?
You can contribute up to $2000 or 100% of your taxable compensation, whichever
is less, to your IRA each year. Your contributions may or may not be fully
deductible. Whether your contributions are deductible or nondeductible, you must
have received taxable compensation to make contributions to an IRA.
HOW MUCH CAN I DEDUCT?
The amount of your deduction depends on whether or not you or your spouse are
covered by a retirement plan at work. If you are covered (or considered
covered), your deduction amount also depends on your filing status, and how much
income you have. The CAN YOU TAKE AN IRA DEDUCTION? chart, in Chapter 4 of this
publication, shows whether you can take a full deduction, a partial deduction,
or no deduction. To figure a partial deduction, see the worksheets provided in
Chapter 4.
NONDEDUCTIBLE IRA CONTRIBUTIONS. Even if you cannot take a full deduction, you
can still contribute up to $2,000 or 100% of compensation, whichever is less.
The contributions that are not deductible are called "nondeductible
contributions." When you make these, you must attach Form 8606 to your tax
return.
CAN I TRANSFER (ROLL OVER) RETIREMENT PLAN ASSETS?
If you want to move your IRA assets into another IRA, you can. If you receive
an eligible rollover distribution from an employer's qualified retirement plan
that you want to roll over (transfer) into your IRA, you can do that too. You
can also roll over IRA assets into another employer's qualified plan, if all the
assets transferred to the IRA came from an employer's qualified plan. However,
there are special rules that you must follow to avoid paying tax on such
transfers.
WHEN CAN I WITHDRAW OR USE THE ASSETS IN MY IRA?
Generally, you can withdraw money or property from your IRA, without additional
tax, only after you reach age 59 1/2. You must start withdrawing your IRA assets
by April 1 of the year after the year in which you reach age 70 1/2, regardless
of whether you have retired.
Chapter 1 OVERVIEW Page 3
<PAGE>
WHAT ACTS RESULT IN PENALTIES?
You may have to pay additional taxes or penalties if you:
- - Contribute too much to your IRA (excess contribution),
- - Get money or property from your IRA before you reach age 59 1/2 (early
withdrawal),
- - Get too much money or property from your IRA (excess distribution),
- - Do not receive distributions from your IRA soon enough and in the amounts
required (excess accumulation),
- - Use your IRA in a way that is not allowed (prohibited transaction), or
- - Fail to file Form 8606 or overstate nondeductible contributions on it.
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2.
- -------------------------------------------------------------------------------
WHO CAN SET UP AN IRA?
You can set up and make contributions to an IRA if you received taxable
COMPENSATION (defined later) during the year and have not reached age 70 1/2 by
the end of the year.
YOUR IRA. You can have an IRA whether or not you are an active participant in
(covered by) any other retirement plan. However, you may not be able to deduct
all of your contributions if you or your spouse are covered by an employer
retirement plan. See WHO IS COVERED BY AN EMPLOYER PLAN? in Chapter 4.
IRA FOR YOUR SPOUSE. You may be eligible to set up and contribute to an IRA for
your spouse, whether or not he or she received compensation. This is called a
SPOUSAL IRA and is generally set up for a nonworking spouse. See CONTRIBUTION
LIMITS in Chapter 4.
You can use an individual retirement account or annuity, discussed in
Chapter 3, to set up a spousal IRA.
You CANNOT set up one IRA that you and your spouse own jointly. You and
your spouse must use separate IRAs. If you already have an IRA, you can keep
that IRA and set up another for your spouse.
You CANNOT roll over (see ROLLOVERS in Chapter 5) assets from your account
to your spouse's account. However, each spouse may be named as beneficiary and
receive the other spouse's IRA when that spouse dies.
ELIGIBILITY REQUIREMENTS. To contribute to a spousal IRA:
You must be married at the end of the tax year,
Your spouse must be under age 70 1/2 at the end of the tax year,
You must file a joint return for the tax year,
You must have taxable compensation for the year, and
Your spouse must either have no compensation, or choose to be treated as
having no compensation for the tax year.
The choice to be treated as having no compensation is made by identifying the
spousal IRA contribution on the joint return for the year.
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WHAT IS COMPENSATION?
As stated above, to set up and contribute to an IRA, you must have
received taxable compensation. This rule applies whether your
contributions are deductible or nondeductible. Generally, what you
earn from working is compensation.
WHAT INCOME IS COMPENSATION?
Compensation includes:
WAGES, SALARIES, ETC. Wages, salaries, tips, professional fees, bonuses, and
other amounts you receive for providing personal services are compensation.
Alternatively, the IRS treats as compensation any amount properly shown in box 1
of Form W-2, provided that amount is reduced by any amount properly shown in box
11 (nonqualified plans).
COMMISSIONS. An amount you receive that is a percentage of profits or sales
price is compensation.
SELF-EMPLOYMENT INCOME. If you are self-employed (a sole proprietor or a
partner), compensation is your net earnings from your trade or business
(provided your personal services are a material income-producing factor),
reduced by your deduction for contributions on your behalf to retirement plans
and the deduction allowed for one-half of your self-employment taxes.
If you invest in a partnership and do not provide services that are a
material income-producing factor, your share of partnership income is not
compensation.
Compensation also includes earnings from self-employment that are not
subject to self-employment tax because of your religious beliefs. See
Publication 533, SELF-EMPLOYMENT TAX, for more information.
When you have both self-employment income and salaries and wages, your
compensation is the sum of the amounts.
SELF-EMPLOYMENT LOSS. If you have a net loss from self-employment, do not
subtract the loss from salaries
Page 4 Chapter 2 WHO CAN SET UP AN IRA?
<PAGE>
or wages you receive when figuring your total compensation.
ALIMONY AND SEPARATE MAINTENANCE. All taxable alimony and separate maintenance
payments you receive under a decree of divorce or separate maintenance are
treated as compensation.
WHAT INCOME IS NOT COMPENSATION?
Compensation does NOT include:
- - Earnings and profits from property, such as rental income, interest income,
and dividend income,
- - Pension or annuity income,
- - Any deferred compensation received (compensation payments postponed from a
past year),
- - Foreign earned income and/or housing cost amounts that are excluded from
income, or
- - Any other amounts that are excluded from income.
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3.
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WHEN AND HOW CAN AN IRA BE SET UP?
You can set up an IRA at any time during a year. However, the time for
making contributions for a year is limited. See WHEN TO CONTRIBUTE in Chapter 4.
You can set up different kinds of IRAs with a variety of organizations. You
can set up an IRA at a bank or other financial institution, or with a mutual
fund or life insurance company. You can also set up an IRA through your
stockbroker. Any IRA must meet Internal Revenue Code requirements. The
requirements for the various arrangements are discussed below.
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KINDS OF IRAS
Your IRA can be an individual retirement account or annuity. It can
be part of either a simplified employee pension (SEP) of your employer
or part of an employer or employee association trust account.
INDIVIDUAL RETIREMENT ACCOUNT
An individual retirement account is a trust or custodial account
set up in the United States for your exclusive benefit or for the
benefit of your beneficiaries. The account is created by a written
document. The document must show that the account meets all of the
following requirements:
1) The trustee or custodian must be a bank, a federally insured credit union,
a savings and loan association, or an entity approved by the IRS to act as
trustee or custodian.
2) The trustee or custodian generally cannot accept contributions of more than
$2,000 a year. However, rollover contributions and employer contributions
to a simplified employee pension (SEP), as explained in Chapter 8, can be
more than $2,000.
3) Your contributions must be in cash, except that rollover contributions can
be property other than cash. See ROLLOVERS in Chapter 5.
4) The amount in your account must be fully vested (you must have a
nonforfeitable right to the amount) at all times.
5) Money in your account cannot be used to buy a life insurance policy.
6) Assets in your account cannot be combined with other property, except in a
common trust fund or common investment fund.
7) You must start receiving distributions from your account by April 1 of the
year following the year in which you reach age 70 1/2. For detailed
information on distributions from your IRA, see the discussion in Chapter 6
under REQUIRED DISTRIBUTIONS.
INDIVIDUAL RETIREMENT ANNUITY
You can set up an individual retirement annuity by purchasing an annuity
contract or an endowment contract from a life insurance company.
An individual retirement annuity must be issued in your name as the owner,
and either you or your beneficiaries who survive you are the only ones who can
receive the benefits or payments.
An individual retirement annuity must meet the following requirements:
1) Your entire interest in the contract must be nonforfeitable.
2) It must provide that you cannot transfer any portion of it to any person
other than the issuer.
3) It must have flexible premiums so that if your compensation changes, your
payment may also change. This provision applies to contracts issued after
November 6, 1978.
4) It must provide that you cannot contribute more than $2,000 in any year,
and that you must use any refunded premiums to pay for future premiums or
to buy more benefits before the end of the calendar year after the year you
receive the refund.
5) It must begin distributions by April 1 of the year following the year in
which you reach age 70 1/2. See REQUIRED DISTRIBUTIONS in Chapter 6.
Chapter 3 WHEN AND HOW CAN AN IRA BE SET UP? Page 5
<PAGE>
INDIVIDUAL RETIREMENT BONDS
The sale of individual retirement bonds issued by the federal government was
suspended after April 30, 1982. The bonds have these features:
1) You are paid interest on them only when you cash them in.
2) You are not paid any further interest after you reach age 70 1/2. If you
die, interest will stop 5 years after your death, or on the date you would
have reached age 70 1/2, whichever is earlier.
3) You may not transfer the bonds.
4) You may not sell, discount, or use the bonds as collateral or security.
If you cash (redeem) the bonds before the year in which you reach age 59 1/2,
you may be subject to a 10% penalty. See PREMATURE DISTRIBUTIONS, in Chapter 7.
You can roll over redemption proceeds into IRAs.
EMPLOYER AND EMPLOYEE ASSOCIATION TRUST ACCOUNTS
Your employer, labor union, or other employee association can set up a trust to
provide individual retirement accounts for its employees or members. The rules
for individual retirement accounts apply to these employer or union-established
IRAs.
SIMPLIFIED EMPLOYEE PENSION (SEP)
A simplified employee pension (SEP) is a written arrangement that allows your
employer to make deductible contributions to an IRA (a SEP-IRA) set up for you
to receive such contributions. See Chapter 8, SIMPLIFIED EMPLOYEE PENSION (SEP)
for more information.
INHERITED IRAS
If you, as beneficiary, inherit an IRA, that IRA becomes subject to special
rules. An IRA you inherit from an owner who died after October 22, 1986, will
be included in the estate of the decedent and, unless you are the decedent's
surviving spouse, you cannot treat it as your own. This means that, unless you
are the surviving spouse, you cannot make contributions (including rollover
contributions) to the IRA and you cannot roll it over. But, like the original
owner, you generally will not owe tax on the assets in the IRA until you receive
distributions from it.
If you are a surviving spouse, you can elect to treat an inherited IRA as
your own. You will be treated as having made this election if you:
- - Make contributions (including rollover contributions) to the inherited IRA,
or
- - Do not make required distributions from it.
For more information, see the discussions of inherited IRAs in Chapters 5
and 6 and the discussion of distributions to beneficiaries in Chapter 6.
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REQUIRED DISCLOSURES
The trustee or issuer (sometimes called the sponsor) of the IRA you choose
generally must give you a disclosure statement about your arrangement at least 7
days before you set up your IRA. However, the sponsor can give you the
statement not later than the date you set up (or purchase, if earlier) your IRA,
if you are given at least 7 days from that date to revoke the IRA. If you
revoke your IRA within the revocation period, the sponsor must return to you the
entire amount you paid. The sponsor must report on the appropriate IRS forms
both your contribution to the IRA (unless by a trustee-to-trustee transfer) and
the distribution to you upon your revocation of the IRA. These requirements
apply to all sponsors.
Generally, the sponsor is the bank that is the trustee of the account or
the insurance company that issued the annuity contract.
DISCLOSURE STATEMENT. The disclosure statement given to you by the plan sponsor
must contain explanations of items required by the income tax regulations in
plain language. For example, the statement should provide information on when
and how you can revoke the IRA, including the name, address, and telephone
number of the person to receive the notice of cancellation. This explanation
must appear at the beginning of the disclosure statement.
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4.
- ------------------------------------------------------------------------------
HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
As soon as your IRA is set up, you can make contributions (put money in)
to it through your chosen sponsor (trustee or other administrator).
CONTRIBUTIONS MUST BE IN THE FORM OF MONEY (cash, check or money order). You
cannot contribute property. However, you may be able to transfer or roll over
certain property from one account to another. See the discussion of rollovers
and other transfers in Chapter 5.
You can make contributions to your IRA each year that you qualify. TO
QUALIFY TO MAKE CONTRIBUTIONS you must have compensation (as discussed in
Chapter 2)
Page 6 Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
<PAGE>
and have not reached age 70 1/2 during the year. Thus, for any year in which
you do not work, you CANNOT make IRA contributions unless you receive
alimony. EVEN IF YOU DO NOT QUALIFY to make contributions for the current
year, the amounts you contributed for years in which you did qualify can
remain in your IRA. You can resume making contributions for any years that
you qualify.
You can make contributions to a SPOUSAL IRA each year that the spousal
IRA requirements are met. See IRA FOR YOUR SPOUSE in Chapter 2.
There are limits and other rules that affect the amount you can
contribute and the amount you can deduct. This chapter discusses those rules.
CONTRIBUTION LIMITS
The most that you can contribute for any year to your IRA is THE SMALLER OF the
following amounts:
- - Your compensation (defined in Chapter 2) that you must include in income
for the year, or
- - $2,000.
NOTE. This limit is reduced by any contributions to a 501(c)(18) plan
(generally, a plan created before June 25, 1959, funded entirely by employer
contributions).
This is the most you can contribute regardless of whether your
contributions are to one or more IRAs or whether all or part of your
contributions are nondeductible (see NONDEDUCTIBLE CONTRIBUTIONS, later).
EXAMPLES. Betty, who is single, earns $24,000 in 1994. Her IRA
contributions for 1994 are limited to $2,000.
John, a college student working part time, earns $1,500 in 1994. His IRA
contributions for 1994 are limited to $1,500, the amount of his compensation.
SPOUSAL IRA. The total combined contributions you can make each year to your
IRA and a spousal IRA (discussed earlier) is THE SMALLER OF:
- - $2,250 or
- - Your taxable compensation for the year.
NOTE. This limit is reduced by any contributions to a 501(c)(18) plan
(generally, a plan created before June 25, 1959, funded entirely by employer
contributions)
You can divide your IRA contributions between your IRA and the spousal IRA
in any way you choose, as long as you do not contribute more than $2,000 to
either IRA (see examples in next discussion).
SPOUSE HAS COMPENSATION DURING THE YEAR. If your spouse also has taxable
compensation during the year and each of you is under age 70 1/2 at the end of
the year, you and your spouse can each have regular IRAs. You each may
contribute up to the $2,000 limit, unless your taxable compensation (or your
spouse's) is less than $2,000.
However, either you or your spouse can choose to be treated as having no
compensation and use the rules for spousal IRAs. Generally, if one spouse has
compensation of less than $250 for the year, a spousal IRA is more advantageous
than a regular IRA.
EXAMPLE 1. Bill and Linda file a joint return for 1994. Bill earned
$27,000 and Linda earned $190 that year. Linda chose to be treated as having no
compensation; therefore, Bill set up a spousal IRA for her. Since he contributed
$1,800 to his IRA, the most he can contribute to the spousal IRA is $450 ($2,250
minus $1,800).
EXAMPLE 2. Assume the same facts as in Example 1 except Bill's
contribution to the spousal IRA is $2,000 (the limit for either IRA). The most
he can contribute to his own IRA is $250 ($2,250 minus $2,000).
SPOUSE UNDER AGE 70 1/2. You cannot make contributions to your IRA for the
year you reach age 70 1/2 or any later year. However, for any year you have
compensation, you can continue to make contributions of up to $2,000 to a
spousal IRA until the year your spouse reaches age 70 1/2.
CONTRIBUTIONS NOT REQUIRED. You do not have to make contributions to your IRA
or a spousal IRA for every tax year, even if you can.
LESS THAN MAXIMUM CONTRIBUTIONS. If your contributions to your IRA for a year
were less than the smaller of 100% of your compensation or $2,000, YOU CANNOT
CONTRIBUTE MORE IN A LATER YEAR to make up the difference. However, you can
apply an excess contribution in one year to a later year if the contributions
for that later year are less than the maximum allowed for that year. See EXCESS
CONTRIBUTIONS in Chapter 7.
EXAMPLE. Paul earns $30,000 in 1994. Although he can contribute up to
$2,000 for 1994, he contributes only $1,000. Paul cannot make up the $1,000
($2,000 minus $1,000) difference between his actual contributions for 1994 and
his 1994 limit by contributing an additional $1,000 (in excess of the limit for
the later year) in 1995 or any later year.
MORE THAN ONE IRA. If you have more than one IRA, the limit applies to the
total contributions made to your IRAs for the year.
BOTH SPOUSES HAVE COMPENSATION. If both you and your spouse have compensation,
each of you can set up an IRA. Both of you cannot participate in the same IRA.
The maximum contribution for each of you is figured separately and depends on
how much each of you earns.
FILING STATUS has no effect on the amount of the permitted contribution to
an IRA. However, if you or your spouse is covered by a retirement plan at work,
your DEDUCTION may be reduced or eliminated, depending on your filing status and
income. See DEDUCTIBLE CONTRIBUTIONS, later.
Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT? Page 7
<PAGE>
EXAMPLE. Sam and Helen are married. They both work and each has an IRA.
Sam earned $1,800 and Helen earned $28,000 in 1994. Sam can contribute to his
IRA up to $1,800 for the year. Helen can contribute up to $2,000 to her IRA.
Whether they file a joint return or separate returns, the amount they can
contribute is the same.
IRA CONTRIBUTIONS UNDER COMMUNITY PROPERTY LAWS. Contributions cannot be made
to your IRA based on the earnings of your spouse, unless you have a spousal IRA.
The contributions must be based on your own compensation, even in community
property states.
INHERITED IRAS. If you inherit an IRA from your spouse, you can choose to treat
it as your own by making contributions to that IRA. See INHERITED IRAS in
Chapter 3.
If, however, you inherit an IRA from someone who died after December 31,
1983, and you are not the decedent's spouse, you CANNOT CONTRIBUTE to that IRA,
because you cannot treat it as your own. See also INHERITED IRA(S) in Chapter
3, under ROLLOVERS in Chapter 5, and in Chapter 6.
ANNUITY OR ENDOWMENT CONTRACTS. If you invest in an annuity or endowment
contract under an individual retirement annuity, YOU CANNOT CONTRIBUTE MORE THAN
$2,000 toward its cost for the tax year, INCLUDING THE COST OF LIFE INSURANCE
COVERAGE. If you contribute more than $2,000, the annuity or endowment contract
is disqualified.
BROKER'S COMMISSIONS. Broker's commissions that you paid in connection with
your IRA ARE SUBJECT TO the contribution limit and ARE NOT DEDUCTIBLE as a
miscellaneous deduction on Schedule A (Form 1040).
TRUSTEE'S FEES. Trustee's administrative fees that are billed separately and
paid by you in connection with your IRA are deductible. They ARE DEDUCTIBLE (to
the extent they are ordinary and necessary) as a miscellaneous deduction on
Schedule A (Form 1040). The deduction is subject to the 2% of adjusted gross
income limit. These fees ARE NOT SUBJECT TO the contribution limit.
WHEN TO CONTRIBUTE
You can make contributions to your IRA (or to a spousal IRA) for a year at any
time during the year or by the due date for filing your return for that year,
NOT including extensions. For most people, this means that contributions for
1994 must be made by April 17, 1995.
DESIGNATING YEAR FOR WHICH CONTRIBUTION IS MADE. If you contribute an amount to
your IRA between January 1, 1995, and April 17, 1995, you should tell the
sponsor which year (1994 or 1995) the contribution is for. If you do not tell
the sponsor which year it is for, the sponsor can assume, for reporting to the
IRS, that the contribution is for 1995, the year the sponsor received it.
FILING BEFORE MAKING YOUR CONTRIBUTION. You can file your return claiming an
IRA contribution before you actually make the contribution. You must, however,
make the contribution by the due date of your return, NOT including extensions.
- -------------------------------------------------------------------------------
DEDUCTIBLE CONTRIBUTIONS
Generally, you can take a deduction for the contributions that you are allowed
to make to your IRA. However, IF YOU OR YOUR SPOUSE ARE COVERED BY AN EMPLOYER
RETIREMENT PLAN at any time during the year, your allowable IRA deduction may be
less than your allowable contributions. Your allowable deduction may be reduced
or eliminated, depending on the amount of your income and your filing status, as
discussed later under DEDUCTION LIMITS. These limits do not affect your
allowable contributions (see NONDEDUCTIBLE CONTRIBUTIONS, later).
WHO IS COVERED BY AN EMPLOYER PLAN?
The Form W-2, WAGE AND TAX STATEMENT, you receive from your employer includes a
box to indicate whether or not you are covered for the year. The form should
have a mark in the "Pension Plan" box if you are covered.
If you are not certain whether you are covered by your employer's
retirement plan, you should ask your employer.
EMPLOYER PLANS
An employer retirement plan is one that an employer sets up for the benefit of
its employees. For purposes of the IRA deduction rules, an employer retirement
plan is any of the following:
- - A qualified (meets Internal Revenue Code requirements) pension,
profit-sharing, stock bonus, money purchase pension, etc., plan (including
Keogh plans),
- - A 401(k) plan (generally an arrangement included in a profit-sharing or
stock bonus plan that allows you to choose to take part of your
compensation from your employer in cash or have your employer pay it into
the plan),
- - A union plan (a qualified stock bonus, pension, or profit-sharing plan
created by a collective bargaining agreement between employee
representatives and one or more employers),
- - A qualified annuity plan,
- - A plan established for its employees by the United States, a state or
political subdivision thereof, or by an agency or instrumentality of any of
the foregoing (other than an eligible state deferred compensation plan
(section 457 plan)),
- - A tax-sheltered annuity plan for employees of public schools and certain
tax-exempt organizations (403(b) plan),
Page 8 Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
<PAGE>
Table 4.1 CAN YOU TAKE AN IRA DEDUCTION? This chart sums up whether you can
take a full deduction, a partial deduction, or no deduction as
discussed in Chapter 4.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
IF YOUR IF YOU ARE
MODIFIED AGI* COVERED BY A RETIREMENT PLAN AT WORK
IS: AND YOUR FILING STATUS IS:
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
*SINGLE *MARRIED FILING MARRIED FILING
*HEAD OF JOINTLY (EVEN SEPARATELY**
HOUSEHOLD IF YOUR SPOUSE
IS NOT COVERED
BY A PLAN AT
WORK)
*QUALIFYING
WIDOW(ER)
At Least But Less
Than You Can Take You Can Take You Can Take
- ---------------------------------------------------------------------------------------
$0.01 $10,000.00 Full deduction Full deduction Partial deduction
$10,000.00 $25,000.01 Full deduction Full deduction No deduction
$25,000.01 $35,000.00 Partial deduction Full deduction No deduction
$35,000.00 $40,000.01 No deduction Full deduction No deduction
$40,000.01 $50,000.00 No deduction Partial deduction No deduction
$50,000.00 or over No deduction No deduction No deduction
- ---------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
IF YOUR IF YOU ARE NOT
MODIFIED AGI* COVERED BY A RETIREMENT PLAN AT WORK
IS: AND YOUR FILING STATUS IS:
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MARRIED FILING *SINGLE *MARRIED FILING MARRIED FILING
JOINTLY (AND *HEAD OF JOINTLY OR SEPARATELY
YOUR SPOUSE IS HOUSEHOLD SEPARATELY (EVEN IF
COVERED BY A (AND YOUR YOUR SPOUSE
PLAN AT WORK) SPOUSE IS NOT IS COVERED BY
COVERED BY A A PLAN AT
PLAN AT WORK) WORK)***
*QUALIFYING
WIDOW(ER)
At Least But Less
Than You Can Take You Can Take You Can Take You Can Take
- -----------------------------------------------------------------------------------------------------------
$0.01 $10,000.00 Full deduction
$10,000.00 $25,000.01 Full deduction
$25,000.01 $35,000.00 Full deduction Full Full Full
Deduction Deduction Deduction
$35,000.00 $40,000.01 Full deduction
$40,000.01 $50,000.00 Partial deduction
$50,000.00 or over No deduction
- -----------------------------------------------------------------------------------------------------------
</TABLE>
*MODIFIED AGI (adjusted gross income) is: (1) for Form 1040A--the amount on line
14 increased by any excluded series EE bond interest shown on Form 8815,
EXCLUSION OF INTEREST FROM SERIES EE U.S. SAVINGS BONDS ISSUED AFTER 1989, or
(2) for Form 1040--the amount on line 31, figured without taking into account
any IRA deduction or any foreign earned income exclusion and foreign housing
exclusion (deduction), or any series EE bond interest exclusion from Form 8815.
**If you DID NOT live with your spouse AT ANY TIME during the year, your filing
status is considered, for this purpose, as Single (therefore your IRA deduction
is determined under the "Single" column). ***You are entitled to the full
deduction ONLY IF you DID NOT live with your spouse AT ANY TIME during the year.
If you DID live with your spouse during the year, you are, for this purpose,
treated as though you are covered by a retirement plan at work (therefore, your
IRA deduction is determined under the "Married Filing Separately" column in the
"If You Are Covered by a Retirement Plan..." section of the chart).
- --------------------------------------------------------------------------------
- - A simplified employee pension (SEP) plan, or
- - A 501(c)(18) trust (a certain type of tax-exempt trust created before June
25, 1959, that is funded only by employee contributions), if you made
deductible contributions during the year.
WHEN ARE YOU COVERED?
Special rules apply to determine whether you are considered to be covered by (an
active participant in) a plan for a tax year. These rules differ depending on
whether the plan is a defined contribution or defined benefit plan. They also
differ because of your marital status.
DEFINED CONTRIBUTION PLAN. Generally, you are considered covered by a defined
contribution plan if amounts are contributed or allocated to your account for
the plan year that ends within your tax year.
A defined contribution plan is a plan that provides for a separate
account for each person covered by the plan. Benefits are based only
on amounts contributed to or allocated to each account. Types of
defined contribution plans include profit-sharing plans, stock bonus
plans, and money purchase pension plans.
EXAMPLE. Company A has a money purchase pension plan. Its plan year is from
July 1 to June 30. The plan provides that contributions must be allocated as of
June 30. Bob, an employee, leaves Company A on December 30, 1993. The
contribution for the plan year ending on June 30, 1994, is not made until
February 15, 1995 (when Company A files its corporate income tax return). In
this case, Bob is considered covered by the plan for his 1994 tax year.
DEFINED BENEFIT PLAN. If you are eligible (meet minimum age and years of
service requirements) to participate in your employer's defined benefit plan for
the plan year that ends within your tax year, you are considered covered by the
plan. This rule applies even if you declined to be covered by the plan, you did
not make a required contribution, or you did not perform the minimum service
required to accrue a benefit for the year.
A defined benefit plan is any plan that is not a defined contribution plan.
Contributions to a defined benefit plan are based on a computation of what
contributions are necessary to provide definite benefits to plan participants.
Defined benefit plans include pension plans and annuity plans.
Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT? Page 9
<PAGE>
EXAMPLE. John, an employee of B, is eligible for coverage under B's
defined benefit plan with a July 1 to June 30 plan year. John leaves B on
December 30, 1993. Since John is eligible for coverage under the plan for its
year ending June 30, 1994, he is considered covered by the plan for his 1994
tax year.
NONVESTED EMPLOYEES. If, for a plan year, an amount is allocated to your plan
account in a defined contribution plan, or you accrue a benefit in a defined
benefit plan, but you have NO VESTED INTEREST (legal right) in such account or
accrual, you are still covered by such plan as an active participant.
MARITAL STATUS. Generally you are considered covered by an employer retirement
plan because your spouse is covered by one. To determine whether you are
considered covered by an employer retirement plan for the tax year
because of your spouse's coverage, you must wait until the last day of
the year. This is because your filing status (whether you are considered
married or single) for the year depends on your marital status on the last day
of the tax year.
IF YOU WERE MARRIED TO TWO DIFFERENT SPOUSES DURING THE SAME YEAR, you are
considered married for the year, for this purpose, to the spouse to whom you
were married at the end of the year.
IF YOUR SPOUSE DIED DURING THE YEAR, and you file a joint return as the
surviving spouse, coverage by an employer retirement plan for that year is
determined as if your spouse were still alive.
IF YOU ARE MARRIED FILING A JOINT RETURN. Both you and your spouse are
considered covered by a plan if either of you is covered by a plan and you file
a joint return.
IF YOU ARE MARRIED FILING A SEPARATE RETURN and you are not covered by an
employer retirement plan, but your spouse is, you are considered covered if you
and your spouse lived together at any time during the year.
FEDERAL JUDGES are considered covered by an employer retirement plan in figuring
the IRA deduction.
WHEN ARE YOU NOT COVERED?
You are not covered by an employer plan if neither you nor your spouse is
covered for any part of the year. You are also not covered for this purpose in
the following situations.
IF YOU ARE MARRIED FILING A SEPARATE RETURN and you are not covered by an
employer retirement plan, you can be considered not covered, even if your spouse
is covered by a plan. This rule applies only if you and your spouse did not live
together at any time during the year.
COVERAGE UNDER SOCIAL SECURITY OR RAILROAD RETIREMENT (TIER I AND TIER II) does
not count as coverage under an employer retirement plan in figuring the IRA
deduction.
IF YOU RECEIVE RETIREMENT BENEFITS FROM A PREVIOUS EMPLOYER'S PLAN and you are
not covered (or considered covered because of your spouse) under another
employer plan, you are not considered covered by a plan.
RESERVISTS AND VOLUNTEER FIRE FIGHTERS. Certain members of the reserve units of
the Armed Forces (in general, those members who did not serve more than 90 days
during the year) and certain volunteer fire fighters (in general, those members
whose accrued retirement benefits at the beginning of the year will not exceed
$1800 per year at retirement) are not considered covered by U.S. or local
government retirement plans.
SOCIAL SECURITY RECIPIENTS
If you receive social security benefits, have taxable compensation, contribute
to your IRA, and are covered (or considered covered) by an employer retirement
plan, complete the worksheets in Appendix B of this publication. Use these
worksheets to figure your IRA deduction and the taxable portion, if any, of your
social security benefits.
DEDUCTION LIMITS
As discussed under DEDUCTIBLE CONTRIBUTIONS, earlier, the deduction you can take
for contributions made to your IRA depends on whether you or your spouse is
covered for any part of the year by an employer retirement plan. But your
deduction is also affected by how much income you have and your filing status,
as discussed below under ADJUSTED GROSS INCOME LIMITATION.
FULL DEDUCTION. If neither you nor your spouse is covered for any part of the
year by an employer retirement plan, you can take a deduction for your total
contributions to one or more IRAs of up to $2,000, or 100% of compensation,
whichever is less. This limit is reduced by any contributions to a 501(c)(18)
plan.
REDUCED OR NO DEDUCTION. If either you or your spouse is covered by an
employer retirement plan, you may be entitled to only a partial (reduced)
deduction or no deduction at all, depending on your income and your filing
status. Your deduction begins to decrease (phase out) when your income rises
above a certain amount and is eliminated altogether when it reaches a higher
amount. The amounts vary depending on your filing status.
ADJUSTED GROSS INCOME LIMITATION
The effect of income on your deduction, as just described, is sometimes
called the adjusted gross income limitation (AGI limit). To compute your
REDUCED IRA DEDUCTION, you must first determine your modified adjusted gross
income and your filing status.
Page 10 Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
<PAGE>
MODIFIED ADJUSTED GROSS INCOME (MODIFIED AGI) IS:
- - If you file FORM 1040 -- the amount on the page 1 "adjusted gross income"
line, but modified (changed) by figuring it without taking any:
a) IRA deduction,
b) Foreign earned income exclusion,
c) Foreign housing exclusion or deduction, or
d) Exclusion of series EE bond interest shown on Form 8815.
- - If you file FORM 1040A -- the amount on the page 1 "adjusted gross income"
line, but modified by figuring it without any IRA deduction, or any
exclusion of series EE bond interest shown on Form 8815.
NOTE: Do not assume that modified AGI is the same as your compensation.
You will find that your modified AGI may include income in addition to your
taxable compensation such as interest, dividends, and INCOME FROM IRA
DISTRIBUTIONS, discussed next.
INCOME FROM IRA DISTRIBUTIONS. If you received IRA distributions in 1994
and your IRA(s) include(s) only deductible contributions, the distributions are
fully taxable.
If you made contributions for 1994 that may be nondeductible contributions
(discussed later), depending on whether your IRA deduction for that year is
reduced (see DEDUCTION PHASEOUT, later), the distributions may be partly
tax-free and partly taxable. IN THAT CASE, YOU MUST FIGURE THE TAXABLE PART OF
THE IRA DISTRIBUTION BEFORE YOU CAN FIGURE YOUR MODIFIED AGI. To do this, you
can use the WORKSHEET TO FIGURE TAXABLE PART OF DISTRIBUTION, under TAX
TREATMENT OF DISTRIBUTIONS in Chapter 6.
FILING STATUS. Your filing status depends primarily on your marital status. For
this purpose you need to know if your filing status is single (or head of
household), married filing jointly (or qualifying widow(er)), or married filing
separately. If you need more information on filing status, see Publication 501,
EXEMPTIONS, STANDARD DEDUCTION, AND FILING INFORMATION.
MARRIED FILING SEPARATE EXCEPTION. If you did not live with your spouse at
any time during the year and you file a separate return, your filing status is
considered, for this purpose, as single.
DEDUCTION PHASEOUT. Your IRA deduction is reduced or eliminated entirely
depending on your filing status and modified AGI as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Your IRA deduction Your
is reduced if your deduction
MODIFIED AGI is eliminated
is within the if your
If your FILING PHASEOUT RANGE MODIFIED AGI
STATUS is: of: is:
- -------------------------------------------------------------------------------
<S> <C> <C>
Single, or
Head of
household $25,000.01 - $35,000 $35,000 or more
Married--
joint
return, or
Qualifying
widow(er) $40,000.01 - $50,000 $50,000 or more
Married--
separate
return $ 0.01 - $10,000 $10,000 or more
</TABLE>
- -------------------------------------------------------------------------------
HOW TO FIGURE YOUR REDUCED IRA DEDUCTION
If you are covered or considered covered by an employer retirement plan and your
modified AGI is within the phaseout range for your filing status (see above
table), your IRA deduction must be reduced. You can figure your reduced IRA
deduction FOR EITHER Form 1040 or Form 1040A by using the following worksheet.
Also, the instructions for these tax forms include similar worksheets.
NOTE: If you were married and both you and your spouse worked and you both
contributed to IRAs, figure the deduction for each of you separately.
If you were divorced or legally separated (and did not remarry) before the
end of the year, you cannot deduct any contributions you made to your spouse's
IRA. After a divorce or legal separation, you can deduct only the contributions
you made to your own IRA and your deductions are subject to the adjusted gross
income limitation under the rules for single individuals.
DEDUCTIBLE (AND NONDEDUCTIBLE) IRA CONTRIBUTIONS FOR AN IRA OTHER
THAN A SPOUSAL IRA. Complete lines 1 through 8 to figure your deductible and
nondeductible IRA contributions for the year.
Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT? Page 11
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
WORKSHEET FOR REDUCED IRA DEDUCTION
(USE ONLY IF YOU ARE COVERED, OR CONSIDERED COVERED, BY AN EMPLOYER PLAN AND
YOUR MODIFIED AGI IS WITHIN THE APPLICABLE PHASEOUT RANGE)
- -------------------------------------------------------------------------------
And your ENTER on
MODIFIED AGI line 1
If your FILING STATUS is: is over: below:
- -------------------------------------------------------------------------------
<S> <C> <C>
Single, or Head
of household $25,000 $35,000
Married-joint return,
or Qualifying widow(er) $40,000 $50,000
Married-separate return $ -0- $10,000
</TABLE>
- -------------------------------------------------------------------------------
1. Enter applicable amount from above. . . . . . . . . . .
---------------
2. Enter your MODIFIED AGI (combined, if married
filing jointly) . . . . . . . . . . . . . . . . . . . .
---------------
NOTE: If line 2 is equal to or more than the amount on line 1, STOP HERE;
your IRA contributions are not deductible; see NONDEDUCTIBLE CONTRIBUTIONS,
later.
3. Subtract line 2 from 1. (IF LINE 3 IS $10,000 OR
MORE, STOP HERE; you can take a full IRA deduction
for contributions of up to $2,000 or 100% of your
compensation, whichever is less.)
---------------
4. Multiply line 3 by 20% (.20). If the result is not a
multiple of $10, round it to the next highest
multiple of $10. (For example, $611.40 is rounded to
$620.) However, if the result is less than $200,
enter $200. . . . . . . . . . . . . . . . . . . . . .
---------------
5. Enter your compensation. (DO NOT include your
spouse's compensation, and, if you file Form 1040, do
not reduce your compensation by any losses from
self-employment.). . . . . . . . . . . . . . . . . . .
---------------
6. Enter contributions you made, or plan to make, to
your IRA for 1994, but DO NOT enter more than $2,000.
(If contributions are more than $2,000, see EXCESS
CONTRIBUTIONS in Chapter 7.) . . . . . . . . . . . . .
---------------
7. IRA DEDUCTION. Compare lines 4, 5, and 6. Enter the
smallest amount (or a smaller amount if you choose)
here and on the Form 1040 or 1040A line for your IRA,
whichever applies. (If line 6 is more than line 7 and
you want to make a nondeductible contribution, go
to line 8.). . . . . . . . . . . . . . . . . . . . . .
---------------
8. NONDEDUCTIBLE CONTRIBUTION. Subtract line 7 from line
5 or 6, whichever is smaller. Enter the result here
and on line 1 of your Form 8606. (See NONDEDUCTIBLE
CONTRIBUTIONS, later.) . . . . . . . . . . . . . . . .
---------------
DEDUCTIBLE (AND NONDEDUCTIBLE) IRA CONTRIBUTIONS FOR A SPOUSAL
IRA. The deduction phaseout rules that reduce or eliminate your IRA deduction
also apply to a spousal IRA. If you have a spousal IRA, are covered by an
employer retirement plan, and your modified AGI is within the phaseout range,
you can take only a reduced spousal IRA deduction.
Complete lines 9 through 17 to figure deductible and nondeductible
contributions (discussed later) for the year to a spousal IRA.
9. Enter the smaller of (a) $2,250 or (b) the
amount from line 5 . . . . . . . . . . . . . . . . . .
---------------
10. Add lines 7 and 8. Enter the total. (IF THIS AMOUNT IS
EQUAL TO OR MORE THAN LINE 9, STOP HERE; you cannot
make contributions to a spousal IRA. Also, see EXCESS
CONTRIBUTIONS in Chapter 7, later.) . . . . . . . . .
---------------
11. Subtract line 10 from line 9 . . . . . . . . . . . . .
---------------
12. Enter the smallest of (a) IRA contributions for 1994
to your spouse's IRA; (b) $2,000; or (c) the amount
on line 11. (If contributions are more than $2,000,
see EXCESS CONTRIBUTIONS, later.). . . . . . . . . . .
---------------
13. Multiply line 3 by 22.5% (.225). If the result is not
a multiple of $10, round it to the next highest multiple
of $10. However, if the result is less than $200,
enter $200 . . . . . . . . . . . . . . . . . . . . . .
---------------
14. Enter the amount from line 7 . . . . . . . . . . . . .
---------------
15. Subtract line 14 from line 13. Enter the result but
do not enter more than the amount on line 12 . . . . .
---------------
16. SPOUSAL IRA DEDUCTION. Compare lines 4, 5, and 15.
Enter the smallest amount (or a smaller amount if you
choose) here and on your Form 1040 or 1040A. (If line
12 is more than line 16 and you want to make a
nondeductible contribution for your spouse,
go to line 17.). . . . . . . . . . . . . . . . . . . .
---------------
17. SPOUSAL IRA NONDEDUCTIBLE CONTRIBUTIONS. Subtract
line 16 from line 12. Enter the result here and on line
1 of your spouse's Form 8606 . . . . . . . . . . . . .
---------------
REPORTING DEDUCTIBLE CONTRIBUTIONS
You do not have to itemize deductions to claim your deduction for IRA
contributions. For FORM 1040, deduct your IRA contributions for 1994 on line
23a and, if you file a joint return, deduct your spouse's IRA contributions on
line 23b. For FORM 1040A, deduct your contributions on line 15a and, if you file
a joint return, deduct your spouse's IRA contributions on line 15b. You
can use either form in most cases.
YOU MUST USE FORM 1040 instead of Form 1040A if you owe tax on any early
distributions from your IRA, any excess contributions made to your IRA, or any
excess accumulations in your IRA account (see Chapter 7, WHAT ACTS RESULT IN
PENALTIES?).
FORM 1040EZ does not provide for IRA deductions.
IF YOU ARE SELF-EMPLOYED (a sole proprietor or partner) and have a SEP-IRA, take
your deduction for allowable contributions on line 27, Form 1040.
Page 12 Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
<PAGE>
FORM 1040
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
23A Your IRA deduction (see page 19) . . . . . . . . . . 23A
---------------
ADJUSTMENTS B Spouse's IRA deduction (see page 19) . . . . . . . . 23B
---------------
TO INCOME 24 Moving expenses. Attach Form 3903 or 3903-F . . . . 24
---------------
25 One-half of self-employment tax. . . . . . . . . . . 25
---------------
CAUTION: See 26 Self-employed health insurance deduction (see page 21) 26
---------------
instructions.. 27 Keogh retirement plan and self-employed SEP deduction 27
---------------
28 Penalty on early withdrawal of savings . . . . . . . 28
---------------
29 Alimony paid. Recipient's SSN 29
---------------------- ---------------
30 Add lines 23a through 29. These are your TOTAL ADJUSTMENTS . . . . . . . . 30
- ------------------------------------------------------------------------------------------------------------------------
ADJUSTED 31 Subtract line 30 from line 22. This is your ADJUSTED GROSS INCOME If less
GROSS than $25,296 and a child lived with you (less than $9,000 if a child didn't live
INCOME with you), see "Earned Income Credit" on page 27 31
- ------------------------------------------------------------------------------------------------------------------------
Cat. No. 11320B Form 1040 (1994)
FORM 1040A
14 Add lines 7 through 13b (far right column). This is your TOTAL INCOME. 14 ,
- ------------------------------------------------------------------------------------------------------------------------
15A Your IRA deduction (see page 34). 15a
------------------------------------------------------------------------------
FIGURE
YOUR B Spouse's IRA deduction (see page 34). 15b
------------------------------------------------------------------------------
ADJUSTED C Add lines 15a and 15b. These are your TOTAL ADJUSTMENTS. 15c
----------------------------------------------------------------------------------------------------
GROSS 16 Subtract line 15c from line 14. This is your ADJUSTED GROSS INCOME.
INCOME If less than $25,296 and a child lived with you (less than $9,000 if a child
didn't live with you), see "Earned income credit" on page 44. 16
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Cat. No. 112327A 1994 FORM 1040A PAGE 1
WITHHOLDING ALLOWANCES. To figure the number of additional withholding
allowances on your Form W-4, EMPLOYEE'S WITHHOLDING ALLOWANCE CERTIFICATE, you
can take into account your estimated deductible IRA contributions. For this
purpose, however, do not take into account any of your employer's regular
contributions to your SEP-IRA, discussed later (they generally are not
included in your income and you cannot deduct them). For more information on
withholding, see Publication 505, TAX WITHHOLDING AND ESTIMATED TAX.
FORM 5498. You should receive by May 31, 1995, Form 5498 or a similar statement
from plan sponsors, showing all the contributions made to your IRA for 1994.
- -------------------------------------------------------------------------------
NONDEDUCTIBLE CONTRIBUTIONS
Although your DEDUCTION for IRA contributions may be reduced or eliminated
because of the adjusted gross income limitation (see DEDUCTIBLE CONTRIBUTIONS,
earlier), you can still make CONTRIBUTIONS to your IRA of up to $2,000 ($2,250
for a regular and a spousal IRA combined) or 100% of compensation, whichever is
less. The difference between your total permitted contributions and your total
deductible contributions, if any, is your NONDEDUCTIBLE CONTRIBUTION.
EXAMPLE. Sonny Jones is single. In 1994, he is covered by a retirement
plan at work. His salary is $52,312. His modified adjusted gross income (MAGI)
is $55,000. Sonny makes a $2,000 IRA contribution that year. Because he is
covered by a retirement plan and his MAGI is above $35,000, he cannot deduct his
$2,000 IRA contribution. However, he may choose to either:
1) Designate this contribution as a NONDEDUCTIBLE contribution by
reporting it on his tax return, as explained later under REPORTING
NONDEDUCTIBLE CONTRIBUTIONS, or
2) Withdraw the contribution as explained later under TAX-FREE WITHDRAWAL
OF CONTRIBUTIONS.
As long as your contributions are within the contribution limits just
discussed, none of the earnings on any contributions (deductible or
nondeductible) will be taxed until they are distributed. See Chapter 6, WHEN CAN
I WITHDRAW OR USE ASSETS FROM AN IRA?
COST BASIS. You will have a cost basis in your IRA if you make nondeductible
contributions. Your BASIS is the sum of the nondeductible amounts you have
contributed to your IRA less any distributions of those amounts. When you
withdraw (or receive distributions of) these amounts, as discussed later in
Chapter 6, you can do so tax-free.
Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT? Page 13
<PAGE>
NOTE. Generally, you cannot withdraw only the amounts representing your
basis. If you have basis, your withdrawals will generally include both taxable
and nontaxable amounts. See Chapter 6 for more information.
REPORTING NONDEDUCTIBLE CONTRIBUTIONS
You must report nondeductible contributions, but you do not have to designate a
contribution as nondeductible until you file your tax return. When you file, you
can even designate OTHERWISE DEDUCTIBLE CONTRIBUTIONS as nondeductible.
TO DESIGNATE CONTRIBUTIONS AS NONDEDUCTIBLE, you must file Form 8606,
NONDEDUCTIBLE IRAs (CONTRIBUTIONS, DISTRIBUTIONS, AND BASIS). (See the filled-in
Forms 8606, in Appendix D.) You must file Form 8606 to report nondeductible
contributions even if you do not have to file a tax return for the year.
FILE FORM 8606 IF:
- - You made nondeductible contributions to your IRA for 1994, or
- - You received IRA distributions in 1994 and you have ever made nondeductible
contributions to any of your IRAs.
IF YOU DO NOT REPORT NONDEDUCTIBLE CONTRIBUTIONS, all of your IRA contributions
will be treated as deductible. Thus, when you make withdrawals from your IRA,
the amounts you withdraw will be taxed unless you can show, with satisfactory
evidence, that nondeductible contributions were made.
There is a recordkeeping worksheet, Appendix A, SUMMARY RECORD OF IRA(s)
FOR 1994, that you can use to keep records of your deductible and nondeductible
IRA contributions.
PENALTY FOR OVERSTATEMENT. If you overstate the amount of your nondeductible
contributions on your Form 8606 for any tax year, you must pay a penalty of $100
for each overstatement, unless it was due to reasonable cause.
PENALTY FOR FAILURE TO FILE FORM 8606. You will have to pay a $50 penalty if
you do not file a required Form 8606, unless you can prove that the failure was
due to reasonable cause.
<TABLE>
<CAPTION>
<S> <C>
FORM 8606 NONDEDUCTIBLE IRAs OMB No. 1545-1007
-----------------
(CONTRIBUTIONS, DISTRIBUTIONS, AND BASIS) 1994
Department of the Treasury PLEASE SEE WHAT RECORDS MUST I KEEP? ON PAGE 2 Attachment
Internal Revenue Service ATTACH TO FORM 1040, FORM 1040A, OR FORM 1040NR. Sequence No. 47
- --------------------------------------------------------------------------------------------------------------------------------
Name. If married, file a separate Form 8606 for each spouse. See instructions. Your social security number
- --------------------------------------------------------------------------------------------------------------------------------
Fill in Your Address Only Home address (number and street, or P.O. box if Apt. no.
If You Are Filing This mail is not delivered to your home
Form by Itself and Not
------------------------------------------------------------------------------------------------
With Your Tax Return City, town or post office, state, and ZIP code
- --------------------------------------------------------------------------------------------------------------------------------
CONTRIBUTIONS, NONTAXABLE DISTRIBUTIONS, AND BASIS
1 Enter your IRA contributions for 1994 that you choose to be nondeductible.
Include those made during 1/1/95-4/17/95 that were for 1994. See instructions . . . . . . . . . 1
--------------------------
2 Enter your total IRA basis for 1993 and earlier years. See instructions . . . . . . . . . . . . 2
--------------------------
3 Add lines 1 and 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------------
---------------
DID YOU RECEIVE-------------------------NO-----------------Enter the amount from line 3 on
ANY IRA line 12. Then, stop and read WHEN
DISTRIBUTIONS AND WHERE TO FILE on page 2.
(WITHDRAWLS)
IN 1994? -------------------------YES----------------Go to line 4.
---------------
4 Enter only those contributions included on line 1 that were made during 1/1/95-4/17/95. This
amount will be the same as line 1 if all of your nondeductible contributions for 1994 were
made in 1995 by 4/17/95. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------------
5 Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------------
6 Enter the total value of ALL your IRAs as of 12/31/94 plus any outstanding
rollovers. See instructions . . . . . . . . . . . . . . . . . . . . . . . . 6
--------------------------
7 Enter the total IRA distributions received during 1994. Do not include
amounts rolled over before 1/1/95. See instructions . . . . . . . . . . . . 7
--------------------------
8 Add lines 6 and 7. . . . . . . . . . . . . . 8
--------------------------
9 Divide line 5 by line 8 and enter the result as a decimal (to at least two
places). Do not enter more than "1.00". . . . . . . . . . . . . . . . . . . 9 X .
--------------------------
10 Multiply line 7 by line 9. This is the amount of your nontaxable
distributions for 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------------------
11 Subtract line 10 from line 5. This is the basis in your IRA(s) as of 12/31/94 . . . . . . . . . 11
--------------------------
12 Add lines 4 and 11. This is your total IRA basis for 1994 and earlier years . . . . . . . . . . 12
--------------------------
TAXABLE DISTRIBUTIONS FOR 1994
13 Subtract line 10 from 7. Enter the result here and on Form 1040, line 15b; Form 1040A, line 10b;
or Form 1040NR, line 16b, whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
- --------------------------------------------------------------------------------------------------------------------------------
SIGN HERE ONLY IF YOU Under penalties of perjury, I declare that I have examined this form, including accompanying
ARE FILING THIS FORM statements, and to the best of my knowledge and belief, it is true, correct, and complete.
BY ITSELF AND NOT WITH
----------------------------------------------------------- ----------------------
YOUR TAX RETURN Your signature Date
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 14 Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
<PAGE>
- -------------------------------------------------------------------------------
TAX-FREE WITHDRAWAL OF CONTRIBUTIONS
If you made IRA contributions for 1994, you can withdraw them tax
free (except for any earnings on them) by April 17, 1995 (or a later
date, if you have an extension to file your return). YOU CAN DO THIS IF:
- - You did not take a deduction for the contributions you withdraw, AND
- - You also withdraw any interest or other income earned on the contributions.
You must report this income on your 1994 return.
IRA trustees must include these amounts in box 1 and, if applicable, in box 2a
of Form 1099-R. You must report these amounts on line 15a, Form 1040. If there
is an amount in box 2a of Form 1099-R, include it on line 15b of Form 1040.
PREMATURE WITHDRAWALS TAX. The 10 percent additional tax on withdrawals
made before you reach age 59 1/2 does not apply to these withdrawals of your
contributions. (See EXCEPTIONS in Chapter 6.) However, your withdrawal of the
interest or other income may be subject to this tax. (See EXCESS CONTRIBUTIONS
and PREMATURE DISTRIBUTIONS (EARLY WITHDRAWALS) in Chapter 7.)
EXCESS CONTRIBUTIONS TAX. If any part of these contributions is an excess
contribution, it will be subject to a 6% excise tax. You will not have to pay
the 6% tax if any 1993 excess contribution is withdrawn by April 15, 1994 (plus
extensions), and if any 1994 excess contribution is withdrawn by April 17, 1995
(plus extensions). See EXCESS CONTRIBUTIONS in Chapter 7.
- -------------------------------------------------------------------------------
COMPREHENSIVE EXAMPLES -- DEDUCTIBLE AND NONDEDUCTIBLE CONTRIBUTIONS
The following examples illustrate the use of the IRA deduction worksheet shown
earlier under HOW TO FIGURE YOUR REDUCED IRA DEDUCTION.
EXAMPLE 1. For 1994, Tom and Betty Smith file a joint return on Form 1040.
They both work and Tom is covered by his employer's retirement plan. Tom's
salary is $40,000 and Betty's is $6,555. They each have an IRA and their
combined modified AGI is $46,555. Since their modified AGI is between $40,000
and $50,000 and Tom is covered by an employer plan, each of them is subject to
the deduction limits (see DEDUCTION LIMITS, earlier).
For 1994, Tom contributed $2,000 to his IRA and Betty contributed $500 to
hers. Even though they file a joint return, they must use separate worksheets to
figure the reduced IRA deduction for each of them.
Tom can take a deduction of only $690 (see the worksheet below). Even
though he contributed the maximum ($2,000), $1,310 ($2,000 minus $690) of his
contributions must be treated as nondeductible.
He can choose to treat the $690 as either deductible or nondeductible
contributions. He can either leave the $1,310 of nondeductible contributions
in his IRA or withdraw them by April 17, 1995. He decides to treat the $690
as deductible contributions and leave the $1,310 of nondeductible
contributions in his IRA.
Betty can treat all or part of her contributions as either deductible or
nondeductible. This is because her $500 contribution for 1994 is less than the
$690 deduction limit for her IRA contributions that year (see line 4 of her
worksheet, later). She decides to treat her $500 IRA contributions as
deductible.
Using the WORKSHEET FOR REDUCED IRA DEDUCTION, Tom figures his deductible
and nondeductible amounts as follows:
<TABLE>
<CAPTION>
WORKSHEET FOR REDUCED IRA DEDUCTION
(USE ONLY IF YOU ARE COVERED, OR CONSIDERED COVERED, BY AN EMPLOYER PLAN AND
YOUR MODIFIED AGI IS WITHIN THE APPLICABLE PHASEOUT RANGE)
- -------------------------------------------------------------------------------
And your ENTER on
MODIFIED AGI line 1
If your FILING STATUS is: is over: below:
- -------------------------------------------------------------------------------
<S> <C> <C>
Single, or Head
of household $25,000 $35,000
Married-joint return,
or Qualifying widow(er) $40,000 $50,000
Married-separate return $ -0- $10,000
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1. Enter applicable amount from above . . . . . . . . . . . . . . $50,000
-------
2. Enter your MODIFIED AGI (combined, if married filing
jointly) . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,555
-------
NOTE: If line 2 is equal to or more than the amount on line 1, STOP HERE;
your IRA contributions are not deductible; see NONDEDUCTIBLE CONTRIBUTIONS,
earlier.
3. Subtract line 2 from 1. (If line 3 is $10,000 or more,
STOP HERE; you can take a full IRA deduction for contributions of
up to $2,000 or 100% of your compensation, whichever is less.) . . . $ 3,445
-------
4. Multiply line 3 by 20% (.20). If the result is not a
multiple of $10, round it to the next highest
multiple of $10. (For example, $611.40 is
rounded to $620.) However, if the result
is less than $200, enter $200 . . . . . . . . . . . . . . . . 690
-------
Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT? Page 15
<PAGE>
5. Enter your compensation. (DO NOT include your spouse's compensation,
and, if you file Form 1040, do not reduce your compensation by any losses
from self-employment.) . . . . . . . . . . . . . . . . . . . . . . . 40,000
-------
6. Enter contributions you made, or plan to make,
to your IRA for 1994, but DO NOT enter more than
$2,000. (If contributions are more than $2,000,
see EXCESS CONTRIBUTIONS in Chapter 7.). . . . . . . . . . . . 2,000
-------
7. IRA DEDUCTION. Compare lines 4, 5, and 6. Enter
the smallest amount (or a smaller amount if you
choose) here and on the Form 1040 or 1040A
line for your IRA, whichever applies. (If line 6 is
more than line 7 and you want to make
a nondeductible contribution, go to line 8.) . . . . . . . . . 690
-------
8. Nondeductible contribution. Subtract line 7
from line 5 or 6, whichever is smaller. Enter
the result here and on line 1 of your Form 8606. . . . . . . . 1,310
-------
</TABLE>
Betty figures her IRA deduction as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORKSHEET FOR REDUCED IRA DEDUCTION
(USE ONLY IF YOU ARE COVERED, OR CONSIDERED COVERED, BY AN
EMPLOYER PLAN AND YOUR MODIFIED AGI IS WITHIN THE APPLICABLE
PHASEOUT RANGE)
- -------------------------------------------------------------------------------
And your ENTER on
MODIFIED AGI line 1
If your FILING STATUS is: is over: below:
- -------------------------------------------------------------------------------
<S> <C> <C>
Single, or Head
of household $25,000 $35,000
Married-joint return, or
Qualifying widow(er) $40,000 $50,000
Married-separate return $ -0- $10,000
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1. Enter applicable amount from above. . . . . . . . . . . . . . . . $50,000
-------
2. Enter your MODIFIED AGI (combined, if married filing jointly) . . 46,555
-------
</TABLE>
NOTE: If line 2 is equal to or more than the amount on line 1, STOP HERE;
your IRA contributions are not deductible; see NONDEDUCTIBLE CONTRIBUTIONS,
earlier.
<TABLE>
<CAPTION>
<S> <C>
3. Subtract line 2 from 1. (IF LINE 3 IS $10,000 OR MORE, STOP HERE;
you can take a full IRA deduction for contributions of up to
$2,000 or 100% of your compensation, whichever is less.) . . . . . 3,445
-------
4. Multiply line 3 by 20% (.20). If the result is not a multiple
of $10, round it to the next highest multiple of $10. (For
example, $611.40 is rounded to $620.) However, if the result
is less than $200, enter $200. . . . . . . . . . . . . . . . . . . 690
-------
5. Enter your compensation. (DO NOT include your spouse's
compensation, and, if you file Form 1040, do not reduce your
compensation by any losses from self-employment.). . . . . . . . . 6,555
-------
6. Enter contributions you made, or plan to make, to your IRA for
1994, but DO NOT enter more than $2,000. (If contributions are
more than $2,000, see EXCESS CONTRIBUTIONS in Chapter 7.). . . . . 500
-------
7. IRA DEDUCTION. Compare lines 4, 5, and 6. Enter the smallest
amount (or a smaller amount if you choose) here and on the Form
1040 or 1040A line for your IRA, whichever applies. (If line 6
is more than line 7 and you want to make a nondeductible
contribution, go to line 8.) . . . . . . . . . . . . . . . . . . . 500
-------
8. NONDEDUCTIBLE CONTRIBUTION. Subtract line 7 from line 5 or 6,
whichever is smaller. Enter the result here and on line 1 of
your Form 8606. 0
-------
</TABLE>
The IRA deductions of $690 and $500 on the joint return for Tom and Betty
total $1,190. Betty's unused IRA deduction limit of $190 ($690 minus $500)
cannot be transferred to Tom to increase his deduction.
EXAMPLE 2. Assume the same facts as in Example 1, except that Tom
contributed $250 to a spousal IRA because Betty had no compensation for the year
and did not contribute to an IRA. Their modified AGI remains at $46,555. Tom
uses lines 1 through 8 of his worksheet to complete the spousal IRA portion of
the WORKSHEET FOR REDUCED IRA DEDUCTION as follows:
<TABLE>
<CAPTION>
<S> <C>
9. Enter the smaller of (a) $2,250 or (b) the amount from line 5. . . $2,250
-------
10. Add lines 7 and 8. Enter the total. (IF THIS AMOUNT IS EQUAL TO
OR MORE THAN LINE 9, STOP HERE; you cannot make contributions to
a spousal IRA. Also, see EXCESS CONTRIBUTIONS in Chapter 7,
later.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
-------
11. Subtract line 10 from line 9 . . . . . . . . . . . . . . . . . . . 250
-------
12. Enter the smallest of (a) IRA contributions for 1994 to your
spouse's IRA; (b) $2,000; or (c) the amount on line 11. (If
contributions are more than $2,000, see EXCESS CONTRIBUTIONS,
later.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
-------
13. Multiply line 3 by 22.5% (.225). If the result is not a multiple
of $10, round it to the next highest multiple of $10. However, if
the result is less than $200, enter $200 . . . . . . . . . . . . . 780
-------
14. Enter the amount from line 7 . . . . . . . . . . . . . . . . . . . 690
-------
15. Subtract line 14 from line 13. Enter the result but do not
enter more than the amount on line 12. . . . . . . . . . . . . . . 90
-------
16. SPOUSAL IRA DEDUCTION. Compare lines 4, 5, and 15. Enter the
smallest amount (or a smaller amount if you choose) here and on
your Form 1040 or 1040A. (If line 12 is more than line 16 and
you want to make a nondeductible contribution for your spouse, go
to line 17.) . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
-------
17. SPOUSAL IRA NONDEDUCTIBLE CONTRIBUTIONS. Subtract line 16
from line 12. Enter the result here and on line 1 of your
spouse's Form 8606. 160
-------
</TABLE>
The IRA deductions of $690 and $90 on the joint return for Tom and Betty
total $780. In this case, the full
Page 16 Chapter 4 HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
<PAGE>
spousal IRA deduction of $2,250 (limited to $2,000 for either spouse's IRA) has
been reduced by the IRA deduction phaseout rules to $780.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5.
- -------------------------------------------------------------------------------
CAN I TRANSFER RETIREMENT PLAN ASSETS?
IRA rules permit you to transfer, tax-free, assets (money or property) from
other retirement programs (including IRAs) to an IRA. The rules permit the
following kinds of transfers:
-Transfers from one trustee to another,
-Rollovers, and
-Transfers incident to a divorce.
This chapter discusses all three kinds of transfers.
- -------------------------------------------------------------------------------
TRANSFER FROM ONE TRUSTEE TO ANOTHER
A transfer of funds in your IRA from one trustee DIRECTLY to another,
either at your request or at the trustee's request, is NOT A ROLLOVER. Because
there is no distribution to you, the transfer is tax-free. Since it is not a
rollover, it is not affected by the one-year waiting period that is required
between rollovers, discussed later, under ROLLOVER FROM ONE IRA INTO
ANOTHER.
For information about direct transfers from retirement programs
other than IRAs, see DIRECT ROLLOVER OPTION, later.
- -------------------------------------------------------------------------------
ROLLOVERS
Generally, a rollover is a tax-free distribution to you of cash or other assets
from one retirement program that you contribute to another program. The amount
you roll over tax-free, however, is generally taxable later when the new program
pays that amount to you or your beneficiary.
KINDS OF ROLLOVERS TO AN IRA. There are two kinds of rollover contributions to
an IRA. In one, you put amounts you receive from one IRA into another. In the
other, you put amounts you receive from an employer's qualified retirement plan
for its employees (see EMPLOYER PLANS under WHO IS COVERED BY AN EMPLOYER
PLAN? in Chapter 4) into an IRA.
TREATMENT OF ROLLOVERS. You cannot deduct a rollover contribution, but you must
report the rollover distribution on your tax return as discussed later under
REPORTING ROLLOVERS FROM IRAs, and REPORTING ROLLOVERS FROM EMPLOYER PLANS.
ROLLOVER NOTICE. A written explanation of rollover treatment must be given to
you by the plan making the distribution.
TIME LIMIT FOR MAKING A ROLLOVER CONTRIBUTION
You must make the rollover contribution by the 60th day after the day you
receive the distribution from your IRA or your employer's plan. However, see
EXTENSION OF ROLLOVER PERIOD, later.
ROLLOVERS COMPLETED AFTER THE 60-DAY PERIOD.
Amounts not rolled over within the 60-day period do not qualify for tax-free
rollover treatment and must be treated as a taxable distribution from either
your IRA or your employer's plan. The amount not rolled over is taxable in the
year distributed, not in the year the 60-day period expires. You may also have
to pay a 10% tax on premature distributions and a 15% tax on excess
distributions as discussed in Chapter 7.
Treat a contribution after the 60-day period as a regular contribution to
your IRA. Any part of the contribution that is more than the maximum amount you
could contribute may be an excess contribution, as discussed in Chapter 7.
EXTENSION OF ROLLOVER PERIOD
If an amount distributed to you from an IRA or a qualified employer retirement
plan becomes a FROZEN DEPOSIT in a financial institution during the 60-day
period allowed for a rollover, a special rule extends the period. The period
during which the amount is a frozen deposit is not counted in the 60-day period,
nor can the 60-day period end earlier than 10 days after the deposit is no
longer frozen. To qualify under this rule, the deposit must be frozen on at
least one day during the 60-day rollover period.
A FROZEN DEPOSIT is any deposit that cannot be withdrawn
because:
1) The financial institution is bankrupt or insolvent, or
2) The state where the institution is located restricts withdrawals
because one or more financial institutions in the state are (or are
about to be) bankrupt or insolvent.
Chapter 5 CAN I TRANSFER RETIREMENT PLAN ASSETS? Page 17
160-455 0 - 94 - 2
<PAGE>
ROLLOVER FROM ONE IRA INTO ANOTHER
You may withdraw, tax free, all or part of the assets from one IRA, if you
reinvest them within 60 days in another IRA. Because this is a rollover, you
cannot deduct the amount that you reinvest in the new IRA.
WAITING PERIOD BETWEEN ROLLOVERS. You can take (receive) a distribution from an
IRA and make a rollover contribution (of all or part of the amount received) to
another IRA only once in any one-year period. The one-year period begins on the
date you receive the IRA distribution, not on the date you roll it over into
another IRA.
This rule applies separately to each IRA you own. For example, if you have
two IRAs, IRA-1 and IRA-2, and you roll over assets of IRA-1 into a new IRA-3,
you may also make a rollover from IRA-2 into IRA-3, or into any other IRA within
one year after the rollover distribution from IRA-1. These are both rollovers
because you have not received more than one distribution from either IRA within
one year. However, you cannot, within the one-year period, again roll over the
assets you rolled over into IRA-3 into any other IRA.
Later distributions from an IRA within a one-year period will not qualify
as rollovers. They are taxable and may be subject to the 10% tax on premature
distributions and the 15% tax on excess distributions.
EXCEPTION. An exception to the one-year waiting period rule has been
granted by the IRS for distributions made from a failed financial institution by
the Federal Deposit Insurance Corporation (FDIC) or the Resolution Trust
Corporation (RTC) as receiver for the institution. To qualify for the
exception, the distribution must satisfy the following requirements:
(1) It must NOT be initiated by either the custodial institution or the
depositor;
(2) It must be made because:
a) The custodial institution is insolvent, and
b) The receiver is unable to find a buyer for the institution.
THE SAME PROPERTY MUST BE ROLLED OVER. You must roll over into a new IRA the
same property you received from your old IRA.
PARTIAL ROLLOVERS. If you withdraw assets from an IRA, you may roll over part
of the withdrawal tax free into another IRA and keep the rest of it. The amount
you keep will generally be taxable (except to the extent it is a return of
nondeductible contributions) and may be subject to the 10% tax on premature
distributions and the 15% tax on excess distributions discussed in Chapter 7.
REQUIRED DISTRIBUTIONS. Amounts that must be distributed during a particular
year under the required distribution rules (discussed in Chapter 6) ARE NOT
ELIGIBLE FOR ROLLOVER treatment.
INHERITED IRAs
If you inherit an IRA FROM YOUR SPOUSE, you generally
can roll it over into an IRA established for you, or you can choose to
make it your own as discussed in Chapter 3 under INHERITED IRAs.
Also see DISTRIBUTIONS RECEIVED BY A SURVIVING SPOUSE
later in this chapter.
IF YOU INHERITED AN IRA FROM SOMEONE OTHER THAN YOUR SPOUSE, you cannot roll
it over, or allow it to receive a rollover contribution.
REPORTING ROLLOVERS FROM IRAS
Report any rollover from one IRA to another IRA on lines 15a and 15b, Form 1040
or lines 10a and 10b, Form 1040A. Enter the total amount of the distribution on
line 15a, Form 1040 or line 10a, Form 1040A. If the total amount on line 15a,
Form 1040 or line 10a, Form 1040A was rolled over, enter zero on line 15b, Form
1040 or line 10b, Form 1040A. Otherwise, enter the taxable portion of the part
that was not rolled over on line 15b, Form 1040 or line 10b, Form 1040A. See
DISTRIBUTIONS FULLY OR PARTLY TAXABLE in Chapter 6.
ROLLOVER FROM EMPLOYER'S PLAN INTO AN IRA
If you receive an ELIGIBLE ROLLOVER DISTRIBUTION, from your (or your deceased
spouse's) employer's qualified (meets Internal Revenue Code requirements)
pension, profit-sharing or stock bonus plan, annuity plan, or tax-sheltered
annuity plan (403(b) plan), you can roll over all or part of it into an IRA.
ELIGIBLE ROLLOVER DISTRIBUTION. Generally, an eligible rollover distribution is
any distribution from a qualified retirement plan EXCEPT:
1) A required minimum distribution, or
2) Any of a series of substantially equal periodic distributions paid at least
once a year over:
a) Your lifetime or life expectancy
b) The lifetimes or life expectancies of you and your beneficiary, or
c) A period of 10 years or more.
The taxable parts of most other distributions are eligible rollover
distributions. See MAXIMUM ROLLOVER, later.
WITHHOLDING REQUIREMENT
If an eligible rollover distribution is paid directly to you, the payer must
withhold 20% of it. This applies even if you plan to roll over the distribution
to an IRA (or another qualified plan as discussed in Publication 575). However,
you can avoid withholding by choosing the DIRECT ROLLOVER OPTION, discussed
later.
EXCEPTIONS. Withholding from an eligible rollover distribution paid to you is
not required if:
Page 18 Chapter 5 CAN I TRANSFER RETIREMENT PLAN ASSETS?
<PAGE>
1) The distribution and all previous eligible rollover distributions you
received during your tax year from the same plan (or, at the payor's option,
from all your employer's plans) total less than $200, or
2) The distribution consists solely of employer securities, plus cash of
$200 or less in lieu of fractional shares.
OTHER WITHHOLDING RULES. If you receive a distribution that is not an eligible
rollover distribution, the 20% withholding requirement does not apply. However,
other withholding rules apply to these distributions. The rules that apply
depend on whether the distribution is a PERIODIC DISTRIBUTION or a NONPERIODIC
DISTRIBUTION that is not an eligible rollover distribution. For either of these
distributions, you can still choose not to have tax withheld.
PERIODIC DISTRIBUTIONS. Unless you choose no withholding, your annuity or
periodic payments will be treated like wages for withholding purposes. Periodic
payments are amounts paid at regular intervals, such as weekly, monthly, or
yearly, over a certain period of time, such as for 15 years or for life.
NONPERIODIC DISTRIBUTIONS. For a nonperiodic distribution (a payment other
than a periodic payment) that is not an eligible rollover distribution, the
withholding is 10% of the distribution, unless you choose not to have tax
withheld. The part of any loan treated as a distribution (except an offset
amount to repay a loan), as explained in Publication 575, is subject to
withholding under this rule.
DIRECT ROLLOVER OPTION
Your employer's qualified plan must give you the option to have any part of an
eligible rollover distribution paid directly to an IRA (or to an eligible
retirement plan as discussed in Publication 575). Under this option, all or
part of the distribution can be paid directly to an IRA (or another eligible
retirement plan that accepts rollovers). This option is not required for
distributions that are expected to total less than $200 for the year.
NO TAX WITHHELD. If you choose the direct rollover option, no tax is withheld
from any part of the designated distribution that is directly paid to the
trustee of the IRA (or other plan). If any part is paid to you, the payer must
withhold 20% of that part's taxable amount. Since most distributions are fully
taxable, payers will generally withhold 20% of the entire amount designated for
distribution to you.
OTHER ROLLOVER LIMITS AND SPECIAL RULES
MAXIMUM ROLLOVER. The most you can roll over is the taxable part of any
eligible rollover distribution from your employer's qualified plan (see ELIGIBLE
ROLLOVER DISTRIBUTION, earlier). The distribution you receive generally will be
all taxable unless you have made nondeductible employee contributions to the
plan.
CONTRIBUTIONS YOU MADE TO YOUR EMPLOYER'S PLAN. You cannot roll over a
distribution of contributions you made to your employer's plan, except voluntary
deductible employee contributions (DECs as defined below), which are treated
like employer contributions. If you do, you must treat them as regular
contributions and you may have to pay an excess contributions tax (discussed in
Chapter 7) on all or part of them.
DECs. If you receive a distribution from your employer's qualified plan of
any part of the balance of your DECs and the earnings from them, you can roll
over any part of the distribution. DEC is the short name for voluntary
deductible employee contributions. Prior to January 1, 1987, employees could
make and deduct these contributions to certain qualified employers' plans and
government plans. These are not the same as an employee's elective contributions
to a 401(k) plan, which are not deductible by the employee.
TIME LIMIT. You must complete the rollover within 60 days after the day you
receive the eligible rollover distribution. However, see EXTENSION OF ROLLOVER
PERIOD, earlier.
NO WAITING PERIOD BETWEEN ROLLOVERS. You can make more than one rollover of
employer plan distributions within a year. The once-a-year limit on IRA-to-IRA
rollovers does not apply to these distributions.
IRA AS A HOLDING ACCOUNT (CONDUIT IRA) FOR ROLLOVERS TO OTHER
ELIGIBLE PLANS. If you receive an eligible rollover distribution from your
employer's plan and roll over part or all of it into one or more conduit IRAs,
you can later roll over those assets into a new employer's plan. Your IRA
qualifies as a conduit IRA if it serves as a holding account or conduit for
those assets. The conduit IRA must be made up of only those assets received from
the first employer's plan and gains and earnings on those assets. You must not
have mixed regular contributions or funds from other sources with them.
PROPERTY AND CASH RECEIVED IN A DISTRIBUTION. If you receive property and
cash in an eligible rollover distribution from your employer's plan, you can
roll over either the property or the cash, or any combination of the two that
you choose.
TREATMENT IF THE SAME PROPERTY IS NOT ROLLED OVER. Your contribution to an
IRA of cash representing the fair market value of property received in a
distribution from a qualified retirement plan DOES NOT QUALIFY as a rollover
IF YOU KEEP THE PROPERTY. You must either roll over the property or sell it
and roll over the proceeds, as explained next.
SALE OF PROPERTY RECEIVED IN A DISTRIBUTION FROM A QUALIFIED PLAN. Instead of
rolling over a distribution of
Chapter 5 CAN I TRANSFER RETIREMENT PLAN ASSETS? Page 19
<PAGE>
property other than cash from a qualified employer retirement plan, YOU CAN sell
all or part of the property and roll over the amount you receive into an IRA.
YOU CANNOT substitute your own funds for property you receive from your
employer's retirement plan.
EXAMPLE. You receive a total distribution from your employer's plan
consisting of $10,000 cash and $15,000 worth of property. You decided to keep
the property. You can roll over to an IRA the $10,000 cash received, but you
cannot roll over an additional $15,000 representing the value of the property
you choose not to sell.
TREATMENT OF GAIN OR LOSS. If you sell the distributed property and roll
over all the proceeds into an IRA, no gain or loss is recognized. The sale
proceeds (including any increase in value) are treated as part of the
distribution and are not included in your gross income.
EXAMPLE. On September 4, 1994, John received a lump-sum distribution
from his employer's retirement plan of $50,000 in cash and $50,000 in stock.
The stock was not stock of his employer. On September 26, 1994, he sold the
stock for $60,000. On October 3, 1994, he rolled over $110,000 in cash
($50,000 from the original distribution and $60,000 from the sale of stock).
John does not include the $10,000 gain from the sale of stock as part of his
income because he rolled over the entire amount into an IRA.
NOTE: Special rules may apply to distributions of employer securities. For
more information, get Publication 575.
IF YOU ROLL OVER PART OF THE AMOUNT RECEIVED FROM THE SALE OF PROPERTY, see
Publication 575.
LIFE INSURANCE CONTRACT
You cannot roll over a life insurance contract from a qualified
plan into an IRA.
DISTRIBUTIONS RECEIVED BY A SURVIVING SPOUSE
Your surviving spouse can roll over into an IRA part or all of any eligible
rollover distribution (defined earlier) received from your employer's
qualified plan because of your death. For information about estate tax
consequences of certain rollovers, see Publication 448, FEDERAL ESTATE AND
GIFT TAXES.
DEATH BENEFIT EXCLUSION. In certain situations, your spouse can exclude from
income up to $5,000 of the distribution from a qualified plan or
tax-sheltered annuity. Your spouse cannot roll over into an IRA any part of
the distribution that qualifies for the $5,000 death benefit exclusion. For
more information on the death benefit exclusion, see Publication 575.
NO ROLLOVER INTO ANOTHER EMPLOYER QUALIFIED PLAN. Your surviving spouse who
receives an eligible rollover distribution from your employer's qualified
plan or tax-sheltered annuity can roll over all or any part of it (or all or
any part of a distribution of deductible employee contributions) into an IRA.
He or she cannot roll over a distribution into another qualified employer
plan or annuity.
DISTRIBUTIONS UNDER DIVORCE OR SIMILAR PROCEEDINGS
(ALTERNATE PAYEES)
If you (as a spouse or former spouse of the employee) receive FROM A
QUALIFIED EMPLOYER PLAN a distribution that results from divorce or similar
proceedings, you may be able to roll over all or part of it into an IRA. To
qualify, the distribution must be:
One that would have been an ELIGIBLE ROLLOVER DISTRIBUTION
(defined earlier) if it had been made to an employee, and
Made under a QUALIFIED DOMESTIC RELATIONS ORDER.
QUALIFIED DOMESTIC RELATIONS ORDER. A domestic relations order is a judgment,
decree, or order (including approval of a property settlement agreement) that
is issued under the domestic relations law of a state. A "qualified domestic
relations order" gives to an alternate payee (a spouse, former spouse, child,
or dependent of a participant in a retirement plan) the right to receive all
or part of the benefits that would be payable to a participant under the
plan. The order requires certain specific information, and it may not alter
the amount or form of the benefits of the plan.
TAX TREATMENT IF ALL OF AN ELIGIBLE DISTRIBUTION IS NOT ROLLED OVER. If you
roll over only part of an eligible rollover distribution, the amount you keep
is taxable in the year you receive it. If you roll over none of it, the
special rules for lump-sum distributions (5- or 10-year tax option or 20%
capital gain treatment) may apply (see Publication 575). The 10% additional
tax on premature distributions, discussed in Chapter 7, does not apply.
KEOGH PLANS AND ROLLOVERS
If you are self-employed, you are generally treated as an employee for
rollover purposes. Consequently, if you receive an eligible rollover
distribution from a Keogh plan, you CAN roll over all or part of the
distribution (INCLUDING A LUMP-SUM DISTRIBUTION) into an IRA (or another
eligible retirement plan as discussed in Publication 575).
LUMP-SUM DISTRIBUTIONS. A distribution to you of your complete share from
your Keogh plan IS NOT a lump-sum distribution if you are self-employed,
under age 59 1/2 and are not disabled. Consequently, such distributions do
not qualify for the special tax treatment available to lump-sum
distributions. For information on lump-sum distributions, get Publication 575.
FOR MORE INFORMATION ABOUT KEOGH PLANS, get Publication 560.
Page 20 Chapter 5 CAN I TRANSFER RETIREMENT PLAN ASSETS?
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DISTRIBUTION FROM A TAX-SHELTERED ANNUITY
If you receive an eligible rollover distribution from a tax-sheltered annuity
plan it can be rolled over into an IRA. It cannot be rolled over into
another eligible retirement plan unless that plan is a tax-sheltered annuity
plan.
IF YOU RECEIVE PROPERTY OTHER THAN MONEY, you can sell the property and roll
over the proceeds as discussed earlier.
CONDUIT IRA. If your IRA contains only assets (including earnings and gains)
that were rolled over from a tax-sheltered annuity, you may roll over these
assets into another tax-sheltered annuity. If you plan another rollover into
another tax-sheltered annuity, DO NOT COMBINE the assets in your IRA from the
rollover with assets from another source. DO NOT ROLL OVER an amount from a
tax-sheltered annuity into a qualified pension plan.
FOR MORE INFORMATION ABOUT TAX-SHELTERED ANNUITIES, get Publication 571.
ROLLOVER FROM BOND PURCHASE PLAN
If you redeem retirement bonds that were distributed to you under a QUALIFIED
BOND PURCHASE PLAN, you can roll over tax free part of the amount you receive
from the redemption into an IRA.
You can redeem these bonds even if you have not reached age 59 1/2. In
addition, you can roll over the proceeds, tax free, into a qualified employer
plan. However, when you receive a distribution at a later time, it will not
be eligible for special 5- or 10-year averaging or 20% capital gain treatment.
REPORTING ROLLOVERS FROM EMPLOYER PLANS
Do not use lines 15a or 15b, Form 1040, or lines 10a or 10b, Form 1040A, to
report a rollover from an employer retirement plan to an IRA; use lines 16a
and 16b, Form 1040, or lines 11a and 11b, Form 1040A, instead.
WRITTEN EXPLANATION TO RECIPIENTS
The administrator of a qualified employer plan must, within a reasonable
period of time before making an eligible rollover distribution, provide a
written explanation to you. It must tell you about:
- -Your right to have the distribution paid tax free directly to an
IRA or another eligible retirement plan,
- -The requirement to withhold tax from the distribution if it is not
paid directly to an IRA or another eligible retirement plan,
- -The nontaxability of any part of the distribution that you roll
over to an IRA or another eligible retirement plan within 60 days
after you receive the distribution, and
- -Other qualified employer plan rules, if they apply, including
those for lump-sum distributions, alternate payees, and cash or
deferred arrangements.
REASONABLE PERIOD OF TIME. The plan administrator must provide you with a
written explanation no earlier than 90 days and no later than 30 days before the
distribution is made.
However, you can choose to have a distribution made less than 30 days after
the explanation is provided as long as the following two requirements are met:
1) You must have the opportunity to consider whether or not you want to make a
direct rollover for at least 30 days after the explanation is provided, and
2) The information you receive must clearly state that you have the right to
have 30 days to make a decision.
Contact the plan administrator if you have any questions regarding this
information.
CHOOSING THE RIGHT OPTION. As explained earlier, you can have all or part of
the distribution from your employer's plan made either as a DIRECT ROLLOVER
to an IRA or another eligible retirement plan, or as a PAYMENT TO YOU.
Also, you generally can leave all or part of the distribution in the plan.
If you do not leave the distribution in your employer's plan, the following
comparison chart may help you decide which distribution option to choose.
COMPARISON CHART. To help ensure that you choose the distribution option
that is best for you, carefully compare the following tax effects of each:
DIRECT ROLLOVER PAYMENT TO YOU
- --------------- --------------
No withholding Payer must withhold
income tax of 20% on
the taxable part (even
if you roll it over to
an IRA or other plan).
No 10% additional tax If you are under age 59 1/2
(see PREMATURE a 10% additional tax may
DISTRIBUTIONS, apply to the taxable part
later). (including an amount
equal to the tax withheld)
that is not rolled over.
Not income until later Taxable part (including an
distributed to you amount equal to the tax
from the IRA or withheld) is income to the
other plan. extent not rolled over.
IMPORTANT: If you decide to roll over tax free any part of a distribution,
the DIRECT ROLLOVER option, as indicated above, will generally be to your
advantage, because you will not have 20% withholding or be subject to the 10%
additional tax under that option.
If you have a lump-sum distribution and do not plan to roll over any part, it
may be eligible for special tax treatment that could lower your tax for the
distribution year (see LUMP-SUM DISTRIBUTIONS, earlier). In that case, you
Chapter 5 CAN I TRANSFER RETIREMENT PLAN ASSETS? Page 21
<PAGE>
may want to get Form 4972, TAX ON LUMP-SUM DISTRIBUTIONS, and its
instructions to determine whether your distribution qualifies for special tax
treatment and, if so, to figure your tax under the special methods.
You can then compare any advantages from using Form 4972 to figure your
tax on the lump-sum distribution with any advantages from rolling over tax
free all or part of the distribution. If you roll over any part of the
lump-sum distribution, however, you cannot use the Form 4972 special tax
treatment for the distribution at all.
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TRANSFERS INCIDENT TO DIVORCE
If an interest in an IRA is transferred from your spouse or former spouse to
you by a divorce or separate maintenance decree or a written document related
to such a decree, starting from the date of the transfer, the interest in the
IRA is treated as your IRA. THE TRANSFER IS TAX-FREE. For transfer of
interests in employer plans, see DISTRIBUTIONS UNDER DIVORCE OR SIMILAR
PROCEEDINGS (ALTERNATE PAYEES), under ROLLOVERS, earlier.
TRANSFER METHODS. If you are required to transfer some or all of the assets
in an IRA to your spouse or former spouse, there are two commonly used
methods that you can use to make the transfer. The methods (explained below)
are:
- -Changing the name on the IRA, and
- -Making a DIRECT TRANSFER of IRA assets.
CHANGING THE NAME ON THE IRA. If all the assets in an IRA are to be
transferred, you can make the transfer by changing the name on the IRA from
your name to the name of your spouse or former spouse, whichever applies.
DIRECT TRANSFER. Under this method, you direct the trustee of the IRA to
transfer the affected assets directly to the trustee of a new or existing IRA
set up in the name of your spouse or former spouse, whichever applies. Or, if
your spouse or former spouse is allowed to keep his or her portion of the IRA
assets in your existing IRA, you can direct the trustee to transfer the
assets you are permitted to keep directly to a new or existing IRA set up in
your name. The name on the IRA containing your spouse's or former spouse's
portion of the assets would then be changed to show his or her ownership.
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6.
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WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA?
Because an IRA is a tax-favored means of saving for your retirement, there
are rules limiting the withdrawal and use of your IRA assets. Also, if during
a year you receive DISTRIBUTIONS from an IRA, you MUST GENERALLY INCLUDE THEM
IN YOUR GROSS INCOME for the year. A properly handled rollover, as discussed
in Chapter 5, is an exception to this rule. This chapter discusses this and
other rules affecting distributions from your IRA.
FAILED FINANCIAL INSTITUTIONS. The general rule (you must include IRA
distributions in your gross income unless properly rolled over) applies to
distributions made (with or without your consent) by a state agency as
receiver of an insolvent savings institution. For an exception to the
one-year waiting period rule for rollovers of certain distributions from
failed financial institutions, see EXCEPTION under ROLLOVER FROM ONE IRA INTO
ANOTHER in Chapter 5.
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AGE 59 1/2 RULE
Generally, you cannot withdraw assets (money or other property) from your IRA
without having to pay a 10% additional tax (that is, a 10% tax on the taxable
distribution in addition to the regular income tax), until you reach age 59
1/2. However, there are a number of exceptions to this rule as discussed
below. Also see PREMATURE DISTRIBUTIONS (EARLY WITHDRAWALS) in Chapter 7.
NOTE: If you receive a distribution from an IRA that includes a return of
NONDEDUCTIBLE CONTRIBUTIONS, the additional tax does not apply to the portion
of the distribution that is considered to be nontaxable. See FIGURING THE
NONTAXABLE AND TAXABLE AMOUNTS under TAX TREATMENT OF DISTRIBUTIONS, later in
this chapter.
EXCEPTIONS
The exceptions to the age 59 1/2 rule for distributions are in part designed
to provide relief from hardship situations such as disability and death. But
there is also an exception for distributions that are a part of a series of
substantially equal payments as discussed below under ANNUITY EXCEPTION.
Page 22 Chapter 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA?
<PAGE>
NOTE: Distributions that are rolled over, as discussed in Chapter 5, are
not subject to regular income tax or the 10% additional tax.
DISABILITY EXCEPTION. You can withdraw amounts from your IRA, without having
to pay the 10% additional tax, if you become disabled before you reach age 59
1/2.
You are considered disabled if you cannot do any substantial gainful
activity because of your physical or mental condition. A physician must
determine that the condition has lasted or can be expected to last
continuously for 12 months or more, or that the condition can be expected to
lead to death. For more information, see Publication 524, CREDIT FOR THE
ELDERLY OR THE DISABLED.
DEATH EXCEPTION. If you die before reaching age 59 1/2, the assets in your
IRA can be distributed to your beneficiary or to your estate without either
having to pay the 10% additional tax.
However, if you inherit an IRA from your deceased spouse and elect to
treat it as your own (as discussed under INHERITED IRAS in Chapter 3), any
distribution you later receive before you reach age 59 1/2 may be subject to
the 10% additional tax.
ANNUITY EXCEPTION. You can receive distributions from your IRA that are part
of a series of substantially equal payments over your life (or your life
expectancy), or over the lives of you and your beneficiary (or your joint
life expectancies), without having to pay the 10% additional tax, even if you
receive such distributions before you are age 59 1/2. You must use an
IRS-approved distribution method and you must take at least one distribution
annually for this exception to apply. See FIGURING THE MINIMUM DISTRIBUTION,
later, for one IRS-approved distribution method. Unlike for minimum
distribution purposes, this method, when used for this purpose, results in
the exact amount required, not the minimum amount.
The payments under this exception must continue for at least 5 years, or
until you reach age 59 1/2, whichever is the longer period. This 5-year rule
does not apply if a change from an approved distribution method is because of
the death or disability of the IRA owner.
If the payments under this exception are changed before the end of the
above required periods for any reason other than the death or disability of
the IRA owner, he or she will be subject to the 10% additional tax. For
example, if you made a lump-sum distribution of the balance in your IRA
before the end of the required period for your annuity distributions and you
did not make it because you were disabled, you would be subject to the 10%
additional tax. The tax would apply to the lump-sum distribution and all
previous distributions made under the exception rule.
TIMELY CONTRIBUTION WITHDRAWAL. If you make a contribution to your IRA for a
year, take no education for it, and withdraw it before the due date
(including extensions) of your income tax return for that year, as discussed
earlier under TAX-FREE WITHDRAWAL OF CONTRIBUTIONS in Chapter 4, the
withdrawal of the contribution is NOT A TAXABLE DISTRIBUTION.
However, any interest or other income earned on the contribution, which
also must be withdrawn, is treated as income in the year the contribution was
made. This withdrawn interest or other income also may be subject to the 10%
additional tax on early withdrawals discussed in Chapter 7.
- --------------------------------------------------------------------------------
REQUIRED DISTRIBUTIONS
You cannot keep funds in an IRA indefinitely. Eventually you MUST withdraw
them. See EXCESS ACCUMULATIONS, in Chapter 7. The requirements for
withdrawing IRA funds differ, depending on whether you are the IRA owner or
the beneficiary of a decedent's IRA.
IRA OWNERS
If you are an IRA owner, you must choose to withdraw the balance in your IRA
in one of the following two ways:
- -By withdrawing the ENTIRE BALANCE in your IRA by the REQUIRED BEGINNING DATE
(defined later), or
- -By starting to withdraw PERIODIC DISTRIBUTIONS of the balance in your IRA by
the required beginning date.
PERIODIC DISTRIBUTIONS. If you do not withdraw the entire balance in your IRA
by the required beginning date, you must start to withdraw periodic
distributions over one of the following periods:
1) Your life,
2) The lives of you and your DESIGNATED BENEFICIARY (defined later),
3) A period that does not extend beyond your life expectancy, or
4) A period that does not extend beyond the joint life and last survivor
expectancy of you and your designated beneficiary.
See DETERMINING LIFE EXPECTANCY, later, for more details.
A DESIGNATED BENEFICIARY, for these purposes, is any INDIVIDUAL you name to
receive your IRA upon your death.
IF YOU HAVE MORE THAN ONE BENEFICIARY AND ALL ARE INDIVIDUALS, the
beneficiary with the shortest life expectancy will be the designated
beneficiary used to determine the period over which your withdrawals must be
made. Also, see MINIMUM DISTRIBUTION INCIDENTAL BENEFIT REQUIREMENT (MDIB
REQUIREMENT), later.
REQUIRED BEGINNING DATE (RBD) -- AGE 70 1/2 RULE. You
must receive the entire balance in your IRA or start receiving periodic
distributions from your IRA by April 1 of the year following the year in
which you reach age 70 1/2.
CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA? PAGE 23
<PAGE>
If you choose to receive periodic distributions, you must receive at least
a minimum amount for each year starting with the year you reach age 70 1/2
(your 70 1/2 year). If you did not receive that minimum amount in your 70 1/2
year, then you must receive distributions for your 70 1/2 year that reach the
minimum amount by April 1 of the next year. See MINIMUM DISTRIBUTIONS, later.
DISTRIBUTIONS AFTER THE RBD. The required minimum distribution for any year
after your 70 1/2 year must be made by December 31 of that later year.
EXAMPLE. You reach age 70 1/2 on August 20, 1994. For 1994 (your 70 1/2
year), you must receive the required minimum distribution from your IRA no
later than April 1, 1995. You must receive the required minimum distribution
for 1995 (the first year after your 70 1/2 year) by December 31, 1995.
BENEFICIARIES
If you are the beneficiary of a decedent's IRA, the requirements for withdrawing
the IRA funds differ, depending on whether distributions that satisfy the
minimum distribution requirements have begun.
DISTRIBUTIONS BEGUN BEFORE OWNER'S DEATH. If periodic distributions that
satisfy the minimum distribution requirements have begun and the owner dies,
any undistributed amounts at the IRA owner's death must be distributed at
least as rapidly as under the method being used at the owner's death.
EXCEPTION. This rule does not apply if the designated beneficiary is the
owner's surviving spouse who becomes the new owner by choosing to treat the
IRA as his or her own IRA (see INHERITED IRAS in Chapter 3). In that case,
the surviving spouse can designate beneficiaries and should follow the
required distribution rules for IRA owners in the preceding discussion.
OWNER DIES BEFORE DISTRIBUTIONS BEGUN. If the owner dies before distributions
that satisfy the minimum distribution requirements have begun, the ENTIRE
INTEREST must be distributed under either:
RULE 1. By December 31 of the fifth year following the year of the
owner's death, or
RULE 2. Over the life of the designated beneficiary or over a period not
extending beyond the life expectancy of the designated beneficiary.
(See Table 1 (Single Life Expectancy) in Appendix E.)
The IRA terms can specify whether rule 1 or 2 applies, or they can permit
either the owner or beneficiary to choose which rule applies. If the owner
or beneficiary can choose which rule applies, the choice must generally be
made by December 31 of the year following the year of the owner's death.
Under rule 2, at least a minimum amount must be distributed each year.
IF NO RULE HAS BEEN SPECIFIED OR CHOSEN, distribution must be made under
rule 2 if the beneficiary is the surviving spouse (and he or she did not
choose to treat the IRA as his or her own), or under rule 1 if the
beneficiary is not the surviving spouse.
IF RULE 2 HAS BEEN SPECIFIED OR CHOSEN AND THE BENEFICIARY IS NOT THE
SURVIVING SPOUSE, distribution must begin by December 31 of the year
following the year of the owner's death.
IF RULE 2 HAS BEEN SPECIFIED OR CHOSEN AND THE BENEFICIARY IS THE SURVIVING
SPOUSE (and he or she did not choose to treat the IRA as his or her own),
distribution must begin by the later of:
- -December 31 of the year the IRA owner would have reached age 70 1/2, or
- -December 31 of the year following the year of the owner's death.
A special rule applies IF THE SPOUSE DIES BEFORE THE DATE DISTRIBUTIONS TO
THE SPOUSE MUST BEGIN. In this case, distributions may be made to the
spouse's beneficiary as if the spouse's beneficiary were the IRA owner's
spouse and the owner died on the spouse's date of death.
However, IF THE SPOUSE HAS REMARRIED SINCE THE OWNER'S DEATH and the new
spouse is designated as the spouse's beneficiary, the special rules that
apply to surviving spouses would not apply to the new spouse.
MINIMUM DISTRIBUTIONS
If you are the owner of an individual retirement ACCOUNT, you must figure the
minimum amount required to be distributed each year (see FIGURING THE MINIMUM
DISTRIBUTION, below).
If your IRA is an individual retirement ANNUITY, special rules apply to
figuring the minimum distribution required. For more information on rules for
annuities, get proposed regulation sections 1.401(a)(9)-1, 1.401(a)(9)-2, and
1.408-8.
FIGURING THE MINIMUM DISTRIBUTION
Figure your required minimum distribution for each year by dividing the IRA
ACCOUNT BALANCE as of the close of business on December 31 of the preceding
year by the APPLICABLE LIFE EXPECTANCY. Or, if because you have a nonspouse
beneficiary who is more than 10 years younger than you the distribution must
satisfy the minimum distribution incidental benefit requirement (MDIB),
discussed later, compare the APPLICABLE DIVISOR (see TABLE FOR DETERMINING
APPLICABLE DIVISOR FOR MDIB*, in Appendix E) and the applicable life
expectancy and use the lower number.
APPLICABLE LIFE EXPECTANCY. The applicable life expectancy is:
- -The owner's remaining life expectancy (single life expectancy),
- -The remaining joint life expectancy of the owner and the owner's
designated beneficiary, or
Page 24 CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA?
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*If the owner dies before distributions have begun, the remaining life
expectancy of the designated beneficiary.
For more information, see DETERMINING LIFE EXPECTANCY, later.
FIGURING SUBSEQUENT YEAR DISTRIBUTIONS. To figure the required minimum
distribution after the first distribution year (the owner's 70 1/2 year), reduce
the IRA account balance as of December 31 of that first year by any distribution
for that first year made by April 1 of the following year.
EXAMPLE 1. Joe, born October 1, 1923, reached 70 1/2 in 1994. His wife (his
beneficiary) turned 56 in September 1994. He must begin receiving distributions
by April 1, 1995. Joe's IRA account balance as of December 31, 1993, is $29,000.
Based on their ages at year end (December 31, 1994), the joint life expectancy
for Joe (age 71) and his beneficiary (age 56) is 29 years (see Table II in
Appendix E). The required minimum distribution for 1994, Joe's first
distribution year (his 70 1/2 year), is $1,000 ($29,000 divided by 29). This
amount is distributed to Joe on April 1, 1995.
Joe's IRA account balance as of December 31, 1994, is $29,725.
To figure the minimum amount that must be distributed for 1995, the IRA
account balance (as of December 31, 1994) of $29,725 is reduced by the $1,000
minimum required distribution for 1994 that was made on April 1, 1995. Thus, the
account balance for determining the required distribution for 1995 is $28,725.
DETERMINING LIFE EXPECTANCY
Life expectancies are determined using life expectancy tables like Tables I and
II in APPENDIX E. More extensive tables are in Publication 939.
To determine your annual minimum distribution, use the applicable life
expectancy in Table I (Single Life Expectancy) if the periodic payments are for
your life only. Use the applicable life expectancy in Table II (Joint Life and
Last Survivor Expectancy) if the payments are for the lives of you and your
designated beneficiary.
IF YOU DESIGNATE AS YOUR BENEFICIARY SOMEONE OTHER THAN YOUR SPOUSE, who is
more than 10 years younger than you, and the distributions are not made as
annuity payments under an annuity contract, be sure to see MINIMUM DISTRIBUTION
INCIDENTAL BENEFIT REQUIREMENT (MDIB REQUIREMENT), later.
FOR DISTRIBUTIONS BEGINNING BY THE REQUIRED BEGINNING DATE (RBD) (see PERIODIC
DISTRIBUTIONS under IRA OWNERS, earlier), determine life expectancies using the
ages of the owner and the designated beneficiary (assuming you are using Table
II) as of their birthdays in the owner's 70 1/2 year.
IF THE OWNER DIES BEFORE DISTRIBUTIONS HAVE BEGUN, the life expectancy of the
designated beneficiary is determined using Table I and the age as of the
beneficiary's birthday in the year distributions must begin.
LIFE EXPECTANCY FOR SUBSEQUENT YEAR DISTRIBUTIONS. Unless you choose to
REFIGURE your (or your spouse's) life expectancy each year (as discussed next),
it must be reduced by one for each year that has passed since the date the life
expectancy was initially determined. Use of this rule is said to result
in distributions under the TERM CERTAIN method.
ELECTION TO REFIGURE OR NOT TO REFIGURE LIFE EXPECTANCY. Your IRA terms may
permit you and your spouse to elect whether to refigure one or both of your life
expectancies. You must make this election by the date of the first required
minimum distribution (see REQUIRED BEGINNING DATE (RBD) -- AGE 70 1/2 RULE,
earlier).
REFIGURING LIFE EXPECTANCY. If you own an IRA and elect to refigure your life
expectancy (and that of your spouse, if it applies), it must be REFIGURED
ANNUALLY unless your IRA terms provide otherwise. If you refigure life
expectancy annually, the reduction of it by one for each year after it was
initially determined does not apply.
TO REFIGURE YOUR LIFE EXPECTANCY FOR EACH YEAR, use your age as of your
birthday during the year. Then find your "refigured" life expectancy amount on
Table I.
TO REFIGURE THE JOINT LIFE AND LAST SURVIVOR EXPECTANCY OF YOU AND YOUR SPOUSE
FOR EACH YEAR, use your and your spouse's ages as of your birthdays during the
year. Then find your "refigured" life expectancy amount on Table II.
IF YOUR BENEFICIARY IS NOT YOUR SPOUSE OR IF EITHER (BUT NOT
BOTH) YOU OR YOUR SPOUSE ELECT NOT TO REFIGURE, do not use this method to
refigure your life expectancy. You must use a special computation method that is
discussed under MINIMUM DISTRIBUTION INCIDENTAL BENEFIT REQUIREMENT, and
illustrated in Example 3, later.
See FURTHER INFORMATION, later, for relevant regulation citations.
You can use the worksheet provided at the bottom of Appendix A for determining
your required distribution whether or not you REFIGURE life expectancy.
IF YOU OR YOUR SPOUSE DIES. If the joint life expectancy of you and your
spouse is refigured annually and either of you dies, then only the survivor's
life expectancy is used to figure distributions for the years after the year in
which the death occurred.
IF YOU AND YOUR SPOUSE DIE. If the life expectancies of both you and your
spouse are refigured and both of you die after the date distributions must
start, the entire interest must be distributed before the last day of the year
following the year of the second death.
MINIMUM DISTRIBUTION
INCIDENTAL BENEFIT REQUIREMENT
(MDIB REQUIREMENT)
Distributions from an IRA during the owner's lifetime must satisfy the MDIB
requirement. This is a requirement that must be met to ensure that the IRA is
used primarily
CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA? PAGE 25
<PAGE>
to provide retirement benefits to the IRA owner. After the owner's death, only
"incidental" benefits are expected to remain for distribution to the owner's
beneficiary (or beneficiaries).
IF YOUR SPOUSE IS YOUR ONLY BENEFICIARY, you will satisfy the MDIB requirement
if you satisfy the general minimum distribution requirements just discussed.
IF SOMEONE OTHER THAN YOUR SPOUSE IS YOUR BENEFICIARY AND IS MORE
THAN 10 YEARS YOUNGER THAN YOU, or if you have one or more beneficiaries in
addition to your spouse and the youngest is more than 10 years younger than you,
there are additional steps to figure your required minimum distribution that
satisfies the MDIB requirement. If you have two or more beneficiaries,
including your spouse, the rule in the preceding paragraph applies only if his
or her portion of your benefit is in a separate account.
To figure a minimum distribution that meets the MDIB requirements, you must
complete the following additional steps:
1) Find the APPLICABLE DIVISOR for a person your age in Appendix E under TABLE
FOR DETERMINING APPLICABLE DIVISOR FOR MDIB. Use your age as of your birthday in
the year that you are figuring the minimum distribution.
2) Compare your applicable divisor and your APPLICABLE LIFE EXPECTANCY (see
DETERMINING LIFE EXPECTANCY, earlier) for the year, and determine which number
is smaller.
3) To figure your required minimum distribution, DIVIDE THE IRA ACCOUNT
BALANCE as of the close of business of the December 31 of the preceding year BY
THE SMALLER NUMBER (your applicable divisor or your applicable life expectancy).
EXAMPLE 2. Assume the same facts as in Example 1, earlier, except that Joe's
beneficiary is his brother. Because Joe's beneficiary is not his spouse, he must
use the TABLE FOR DETERMINING APPLICABLE DIVISOR FOR MDIB (see Appendix E) and
compare the applicable divisor from that table to the life expectancy determined
using TABLE II (JOINT LIFE AND LAST SURVIVOR EXPECTANCY) in Appendix E. Joe
must use the smaller number from the tables. In this example, the required
minimum distribution for 1994 is $1,146 ($29,000 divided by 25.3) instead of the
$1,000 computed in Example 1. Joe's adjusted December 31, 1994, account balance
to be used for determining the required distribution for 1995 is $28,579
($29,725 minus $1,146).
EXAMPLE 3. Assume the same facts as in Example 2, except that, because Joe's
IRA terms do not provide otherwise, he must refigure life expectancies to figure
his required minimum distribution for 1995. Joe's minimum distribution for 1995
is figured by dividing his adjusted account balance as of December 31, 1994
($28,579) by his and his brother's joint life and last survivor expectancy.
Their joint life and last survivor expectancy can be refigured as follows:
1) Life expectancy of nonspouse beneficiary (from Table I in Appendix E)
using his or her age as of his or her birthday in calendar year 1994.... 27.7
2) Number of years that have passed since 1994 (use whole number)....... 1
3) Remaining life expectancy period. Subtract line 2 from line 1....... 26.7
4) Find the divisor amount in Table 1 that is closest to, but less than
the amount on line 3. Enter the age shown for that divisor amount...... 58
5) IRA owner's age as of his or her birthday in calendar year 1995...... 72
6) Joint life and last survivor expectancy (from Table II in Appendix)
using the ages on lines 4 and 5......................................... 27.3
7) Applicable divisor (from Table for Determining Applicable Divisor for
MDIB)................................................................... 24.4
8) REFIGURED LIFE EXPECTANCY. Compare lines 6 and 7. Enter the smaller
number here............................................................. 24.4
Joe's required minimum distribution for 1995 using the refigured life expectancy
(line 8 above) is $1,171 ($28,579 divided by 24.4).
EFFECT OF THE IRA OWNER'S DEATH. The MDIB requirement does not apply to
distributions in years after the death of the original IRA owner. Consequently,
if you hold an IRA as the beneficiary of the IRA owner, minimum distributions
from this IRA can be figured using the general rules for minimum distributions
discussed earlier.
FURTHER INFORMATION. Required distribution rules are explained more fully in
sections 1.401(a)(9)--1, 1.401(a)(9)--2, and 1.408 of the proposed Income Tax
Regulations. These regulations can be read in many libraries and IRS offices.
MISCELLANEOUS RULES FOR
MINIMUM DISTRIBUTIONS
The following rules may apply to your minimum distribution.
INSTALLMENTS ALLOWED. The yearly minimum required distribution can be taken in a
series of installments (monthly, quarterly, etc.) as long as the total
distributions for the year equal the minimum required amount.
IF YOU HAVE MORE THAN ONE IRA, you must determine the required minimum
distribution separately for each IRA; however, you can total these minimum
amounts and take the total from any one or more of the IRAs.
EXAMPLE. Mary, born August 1, 1923, became 70 1/2 on February 1, 1994. She has
two IRAs. She must begin receiving her IRA distributions by April 1, 1995. On
December 31, 1993, Mary's account balance from IRA A was $10,000; her account
balance from IRA B was $20,000. Mary's brother, age 64 as of his birthday in
1994, is the beneficiary of IRA A. Her husband, age 78 as of his birthday in
1994, is the beneficiary of IRA B.
PAGE 26 CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA?
<PAGE>
Mary's required minimum distribution from IRA A is $427 ($10,000 divided by
23.4, the joint life and last survivor expectancy of Mary and her brother per
Table II in Appendix E). The amount of the required minimum distribution from
IRA B is $1,143 ($20,000 divided by 17.5, the joint life and last survivor
expectancy of Mary and her husband per Table II in Appendix E). The required
distribution that must be withdrawn by Mary from either one, or both, of her IRA
accounts by April 1, 1995, is $1,570.
IF YOU RECEIVE MORE, IN ANY YEAR, THAN THE REQUIRED MINIMUM AMOUNT FOR THAT
YEAR, you will not receive credit for the additional amount when determining the
required minimum amounts for future years. However, any amount distributed in
your 70 1/2 year will be credited toward the amount that must be distributed by
April 1 of the following year.
ANNUITY DISTRIBUTIONS FROM AN INSURANCE COMPANY. Special rules apply if you
receive distributions from your IRA as an annuity purchased from an insurance
company. See FURTHER INFORMATION, earlier.
- --------------------------------------------------------------------------------
TAX TREATMENT OF DISTRIBUTIONS
In general, include IRA distributions in your gross income in the year you
receive them. Exceptions to this general rule are rollovers and timely
withdrawals of contributions, discussed earlier, and the return of nondeductible
contributions, discussed next under DISTRIBUTIONS FULLY OR PARTLY TAXABLE.
ORDINARY INCOME. IRA distributions that you must include in income are taxed as
ordinary income.
NO SPECIAL TREATMENT. In figuring your tax, you cannot use the special
averaging or capital gain treatment that applies to lump-sum distributions from
qualified employer plans.
DISTRIBUTIONS FULLY
OR PARTLY TAXABLE
Your IRA distributions may be fully or partly taxable, depending on whether your
IRA includes only deductible contributions or any nondeductible contributions.
FULLY TAXABLE. If only deductible contributions were made to your IRA (or IRAs,
if you have more than one) since it was set up, you have NO BASIS in your IRA.
Because you have no basis in your IRA, any distributions are fully taxable when
received. See REPORTING AND WITHHOLDING REQUIREMENTS FOR TAXABLE AMOUNTS later.
PARTLY TAXABLE. If you made nondeductible contributions to any of your IRAs,
you have a COST BASIS (investment in the contract) to the extent of
those contributions. These nondeductible contributions are NOT TAXED when they
are distributed to you. They are a return of your investment in your IRA.
When IRA distributions are made, special rules apply in figuring the tax on
the distributions if:
*Only nondeductible IRA contributions were made and there are any earnings or
gains, or
*If both deductible and nondeductible IRA contributions were made.
Only the part of the distribution that represents nondeductible contributions
(your cost basis) is tax-free. Once nondeductible contributions have been made,
distributions consist partly of nondeductible contributions (basis) and partly
of deductible contributions, earnings, or gains. Until you run out of basis,
each distribution is partly taxable and partly nontaxable.
FORM 8606. You must complete, and attach to your return, Form 8606 if you
receive an IRA distribution and, at any time, have made nondeductible IRA
contributions. Using the form, you will figure the nontaxable distributions for
1994, and your total IRA basis for 1994 and earlier years. See the illustrated
Forms 8606 in Appendix D.
FIGURING THE NONTAXABLE AND TAXABLE
AMOUNTS
If your IRA includes nondeductible contributions and you received a distribution
from it in 1994, you must use Form 8606 to figure how much of your 1994 IRA
distribution is tax free.
IF YOU MADE IRA CONTRIBUTIONS FOR 1994 THAT MAY BE NONDEDUCTIBLE because you
are covered by an employer retirement plan, you also need to use a special
worksheet (See COVERED BY EMPLOYER PLAN?, next). You can then determine how much
you must include in taxable income for any part of the IRA distribution that
represents deductible contributions, earnings or gains. If you have more than
one IRA, you must consider them together, as if they were a single IRA.
COVERED BY EMPLOYER PLAN? If you are covered by an employer retirement plan and
you made IRA contributions for 1994 that may be nondeductible, depending on
whether your IRA deduction for that year is reduced (see DEDUCTION LIMITS, in
Chapter 4), you can use the following worksheet to figure how much of your 1994
IRA distribution(s) is tax-free and how much is taxable. Use the related
instructions, under REPORTING YOUR NONTAXABLE DISTRIBUTION ON FORM 8606, later,
to figure your remaining basis after the distribution.
CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA? PAGE 27
<PAGE>
WORKSHEET TO FIGURE
TAXABLE PART OF DISTRIBUTION
(Use only if you have to figure the taxable part of your 1994 distributions to
determine your modified AGI for that year;
see DEDUCTIONS LIMITS in Chapter 4.)
- --------------------------------------------------------------------------------
1) Enter the basis in your IRA(s) as of 12/31/93
................................................ $
----------
2) Enter all IRA contributions made for 1994,
WHETHER OR NOT DEDUCTIBLE. Include
contributions made during 1/1/95 - 4/15/95
for the 1994 year, but exclude contributions
rolled over from retirement plans............ $
-----------
3) Add lines 1 and 2............................ $
-----------
4) Enter the value of ALL your IRA(s) as of 12/
31/94 (include any outstanding rollovers).... $
-----------
5) Enter the total IRA distributions received in
1994 (Do not include outstanding rollovers).. $
-----------
6) Add lines 4 and 5 ........................... $
-----------
7) Divide line 3 by line 6. Enter the result as
a decimal (to at least two places). Do not
enter more than 1.00 ........................ $
-----------
8) NONTAXABLE PORTION of the distribution.
Multiply line 5 by line 7 ................... $
-----------
9) TAXABLE PORTION of the distribution. Subtract
line 8 from line 5 .......................... $
-----------
REPORTING YOUR NONTAXABLE DISTRIBUTION ON FORM 8606. To report your nontaxable
distribution and to figure the remaining basis in your IRA after distributions,
you can:
1) Use the worksheet in the Form 1040 instructions to figure your deductible IRA
contributions to report on lines 23a and 23b of Form 1040 or lines 15a and
15b of Form 1040A.
2) After you complete the worksheet in the Form 1040 or Form 1040A instructions,
enter your nondeductible IRA contributions on line 1 of Form 8606.
3) Complete lines 2-5 of Form 8606. If your IRA basis before 1994 distributions
(line 5 of Form 8606) is less than the nontaxable part of those distributions
(line 8 of the above worksheet), complete lines 6-13 of Form 8606 and STOP
HERE. If line 5 of Form 8606 is equal to or greater than line 8 of the above
worksheet, follow instructions 4 and 5, next. Do not complete lines 6-9 of
Form 8606.
4) Enter the amount from line 8 of the above worksheet on line 10 of Form 8606.
Enter the amount from line 9 on line 13 of Form 8606.
5) Complete lines 11 and 12 of Form 8606.
EXAMPLE. Rose Green has made the following contributions to her IRAs--
<TABLE>
Year Deductible Nondeductible
- ---- ---------- -------------
<S> <C> <C>
1987 $2,000 -0-
1988 $2,000 -0-
1989 $2,000 -0-
1990 $1,000 -0-
1991 $1,000 -0-
1992 $1,000 -0-
1993 $ 700 $300
----------------------- --------------------
Totals $9,700 $300
</TABLE>
In 1994, Rose, whose IRA deduction for that year may be reduced or eliminated,
makes a $2,000 contribution that may be partly nondeductible. She also withdraws
$5,000. At the end of that year, the fair market value of her accounts,
including earnings, total $20,000. She did not have any tax-free withdrawals in
earlier years. The amount she includes in income is figured as follows:
WORKSHEET TO FIGURE
TAXABLE PART OF DISTRIBUTION
(Use only if you have to figure the taxable part of your 1994 distributions to
determine your modified AGI for that year;
see DEDUCTION LIMITS in Chapter 4.)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
1) Enter the basis in your IRA(s) as of 12/31/93
............................................. $ 300
2) Enter all IRA contributions made for 1994,
WHETHER OR NOT DEDUCTIBLE. Include
contributions made during 1/1/95 - 4/15/95
for the 1994 year, but exclude contributions
rolled over from retirement plans............ $ 2,000
---------
3) Add lines 1 and 2............................ $ 2,300
---------
4) Enter the value of ALL your IRA(s) as of 12/
31/94 (include any outstanding rollovers).... $ 20,000
5) Enter the total IRA distributions received in
1994 (Do not include outstanding rollovers).. $ 5,000
---------
6) Add lines 4 and 5............................. $ 25,000
---------
7) Divide line 3 by line 6. Enter the result as a
decimal (to at least two places). Do not enter
more than 1.00................................ .092
---------
8) NONTAXABLE PORTION of the distribution.
Multiply line 5 by line 7..................... $ 460
---------
9) TAXABLE PORTION of the distribution. Subtract
line 8 from line 5............................ $ 4,540
---------
</TABLE>
The following illustrated Form 8606 for Rose shows the information required
when you need to use the above worksheet to figure your nontaxable distribution.
Assume that the amount used on line 1 of Form 8606 is the amount Rose figured
using instructions 1) and 2) given earlier under REPORTING YOUR NONTAXABLE
DISTRIBUTION ON FORM 8606.
PAGE 28 CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA?
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FORM 8606 NONDEDUCTIBLE IRAs OMB No. 1545-1007
-----------------
(CONTRIBUTIONS, DISTRIBUTIONS, AND BASIS) 1994
Department of the Treasury PLEASE SEE WHAT RECORDS MUST I KEEP? ON PAGE 2 Attachment
Internal Revenue Service ATTACH TO FORM 1040, FORM 1040A, OR FORM 1040NR. Sequence No. 47
- --------------------------------------------------------------------------------------------------------------------------------
Name. If married, file a separate Form 8606 for each spouse. See instructions. Your social security number
Rose Green 001:00:0000
- --------------------------------------------------------------------------------------------------------------------------------
Fill in Your Address Only Home address (number and street, or P.O. box if Apt. no.
If You Are Filing This mail is not delivered to your home
Form by Itself and Not
------------------------------------------------------------------------------------------------
With Your Tax Return City, town or post office, state, and ZIP code
- --------------------------------------------------------------------------------------------------------------------------------
CONTRIBUTIONS, NONTAXABLE DISTRIBUTIONS, AND BASIS
1 Enter your IRA contributions for 1994 that you choose to be nondeductible.
Include those made during 1/1/95-4/17/95 that were for 1994. See instructions . . . . . . . . . 1 500.00
--------------------------
2 Enter your total IRA basis for 1993 and earlier years. See instructions . . . . . . . . . . . . 2 300.00
--------------------------
3 Add lines 1 and 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 800.00
--------------------------
---------------
DID YOU RECEIVE-------------------------NO-----------------Enter the amount from line 3 on
ANY IRA line 12. Then, stop and read WHEN
DISTRIBUTIONS AND WHERE TO FILE on page 2.
(WITHDRAWLS)
IN 1994? -------------------------YES----------------Go to line 4.
---------------
4 Enter only those contributions included on line 1 that were made during 1/1/95-4/17/95. This
amount will be the same as line 1 if all of your nondeductible contributions for 1994 were
made in 1995 by 4/17/95. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0
--------------------------
5 Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 800.00
--------------------------
6 Enter the total value of ALL your IRAs as of 12/31/94 plus any outstanding
rollovers. See instructions . . . . . . . . . . . . . . . . . . . . . . . . 6
--------------------
7 Enter the total IRA distributions received during 1994. Do not include
amounts rolled over before 1/1/95. See instructions . . . . . . . . . . . . 7
--------------------
8 Add lines 6 and 7. . . . . . . . . . . . . . 8
--------------------------
9 Divide line 5 by line 8 and enter the result as a decimal (to at least two
places). Do not enter more than "1.00". . . . . . . . . . . . . . . . . . . 9 X .
--------------------
10 Multiply line 7 by line 9. This is the amount of your nontaxable
distributions for 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 460.00*
--------------------------
11 Subtract line 10 from line 5. This is the basis in your IRA(s) as of 12/31/94 . . . . . . . . . 11 340.00
--------------------------
12 Add lines 4 and 11. This is your total IRA basis for 1994 and earlier years . . . . . . . . . . 12 340.00
--------------------------
TAXABLE DISTRIBUTIONS FOR 1994
13 Subtract line 10 from line 7. Enter the result here and on Form 1040, line 15b; Form 1040A, line 10b;
or Form 1040NR, line 16b, whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4,540.00*
- --------------------------------------------------------------------------------------------------------------------------------
SIGN HERE ONLY IF YOU Under penalties of perjury, I declare that I have examined this form, including accompanying
ARE FILING THIS FORM statements, and to the best of my knowledge and belief, it is true, correct, and complete.
BY ITSELF AND NOT WITH
----------------------------------------------------------- ----------------------
YOUR TAX RETURN Your signature Date
- --------------------------------------------------------------------------------------------------------------------------------
*From worksheet in IRS Publication 590
</TABLE>
RECOGNIZING LOSSES
ON IRA INVESTMENTS
If you have a loss on your IRA investment, you can recognize the loss on your
income tax return, but only when all the amounts in all your IRA accounts have
been distributed to you and the total distributions are less than your
unrecovered basis, if any. Your basis is the total amount of the nondeductible
contributions in your IRAs. You claim the loss as a miscellaneous itemized
deduction, subject to the 2 percent limit, on Schedule A, Form 1040.
EXAMPLE. Bill King has made nondeductible contributions to an IRA totaling
$2,000, giving him a basis at the end of 1993 of $2,000. By the end of 1994, his
IRA earns $400 in interest income. In that year, Bill withdraws $600, reducing
the value of his IRA to $1,800 at year's end. Bill figures the taxable part of
the distribution and his remaining basis on Form 8606 (ILLUSTRATED IN APPENDIX
D).
In 1995, Bill's IRA has a LOSS of $500. At the end of that year, Bill's IRA
balance is $1,300. Bill's remaining basis in his IRA is $1,500. Bill withdraws
the $1,300 balance remaining in the IRA. He can claim a loss for 1995 of $200
(the $1,500 basis minus the $1,300 withdrawn IRA balance).
INHERITED IRAS
The beneficiaries of your IRA must include distributions to them in their gross
incomes.
BENEFICIARIES. Your beneficiaries can be your estate, dependents, and anyone you
choose to receive the benefits of your IRA after you die.
SPOUSE. If you inherit an interest in an IRA from your spouse, you can elect
to treat the entire inherited interest as your own IRA as discussed under
INHERITED IRAS in Chapter 3. See the discussion earlier under REQUIRED
DISTRIBUTIONS for the rules on when you must begin to make withdrawals from the
IRA.
BENEFICIARY OTHER THAN SPOUSE. If you inherit an IRA from someone other than
your spouse, you cannot treat it as though you established it. The IRA may not
be rolled over into, or receive a rollover from, another IRA. No deduction will
be allowed for amounts paid into that inherited IRA, nor can nondeductible
contributions be made to an inherited IRA.
CHAPTER 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA? PAGE 29
<PAGE>
IRA WITH BASIS. If you inherit an IRA from a person who had a basis in the IRA
because of nondeductible contributions, that basis remains with the IRA. Unless
you are the decedent's spouse and choose to treat the IRA as your own, you
cannot combine this basis with any basis you have in your own IRA(s) or any
basis in IRA(s) you inherited from other decedents. If you take a distribution
from an inherited IRA and your IRA, and each has basis, you must complete
separate Forms 8606 to determine the taxable and nontaxable portions of those
distributions.
DEATH BENEFIT EXCLUSION. Your beneficiaries cannot claim a death benefit
exclusion for any part of a distribution from your IRA.
FEDERAL ESTATE TAX DEDUCTION. Your beneficiary may be able to claim a deduction
for estate tax attributable to certain distributions from your IRA after you
die. The beneficiary can deduct the part of the estate tax paid on any part of a
distribution that the beneficiary must include in income as income in respect of
a decedent. He or she can take the deduction for the tax year the beneficiary
reports that income. For information on claiming this deduction, see OTHER TAX
INFORMATION in Publication 559, TAX INFORMATION FOR SURVIVORS, EXECUTORS, AND
ADMINISTRATORS.
Any taxable part of a distribution that is not income in respect of a
decedent is a payment the beneficiary must include in income. However, the
beneficiary cannot take any estate tax deduction for this part.
If the beneficiary is your spouse, he or she can, as the surviving spouse,
roll over the distribution to another IRA and avoid including it in income for
the year received.
OTHER SPECIAL IRA SITUATIONS
There are other special IRA situations that you may encounter. They include
the following:
DISTRIBUTION OF AN ANNUITY CONTRACT FROM YOUR IRA ACCOUNT. You may tell the
trustee or custodian of your IRA account to use the amount in the account to
buy an annuity contract for you. You are not taxed when you receive the
annuity contract from your account. You are taxed when you start receiving
payments from that annuity contract.
TAX TREATMENT. If only deductible contributions were made to your IRA
since it was set up (this includes all your IRAs, if you have more than one),
the annuity payments are fully taxable.
If your IRA includes both deductible and nondeductible contributions, the
annuity payments are taxed as explained earlier under DISTRIBUTIONS FULLY OR
PARTLY TAXABLE.
CASHING IN RETIREMENT BONDS. When you cash in retirement bonds, you are taxed on
the entire amount you receive. If you do not cash in your bonds before the end
of the year in which you reach age 70 1/2, you will be taxed on the entire value
of the bonds at that time. This is the amount you would have received if you
had cashed in the bonds at that time. When the bonds are cashed later, you will
not be taxed again.
REPORTING AND WITHHOLDING REQUIREMENTS FOR TAXABLE AMOUNTS
If you receive a distribution from your IRA, you will receive FORM 1099-R,
DISTRIBUTIONS FROM PENSIONS, ANNUITIES, RETIREMENT OR PROFIT-SHARING PLANS,
IRAS, INSURANCE CONTRACTS, ETC., or a similar statement. IRA distributions are
shown in Boxes 1 and 2 of Form 1099-R. A number or letter code in Box 7 tells
you what type of distribution you received from your IRA. THE NUMBER CODES MEAN:
1) Early (premature) distribution, no known exception.
2) Early (premature) distribution, exception applies.
3) Disability.
4) Death.
5) Prohibited transactions.
6) Section 1035 exchange (a tax-free exchange of
insurance contracts).
7) Normal distribution.
8) Excess contributions plus earnings/
excess deferrals (and/or earnings)
taxable in 1994.
9) PS-58 costs (premiums paid by a trustee or
custodian for current insurance protection,
taxable to you currently).
THE LETTER CODES MEAN:
P--Excess contributions plus earnings/
excess deferrals taxable in 1993.
A--Eligible for 5-year/10-year averaging.
B--Eligible for death benefit exclusion.
C--Eligible for both A and B.
D--Excess contributions plus earnings/
excess deferrals taxable in 1992.
E--Excess annual additions under section 415.
F--Charitable gift annuity.
G--Direct rollover to IRA.
H--Direct rollover to qualified plan or
tax-sheltered annuity.
If the distribution shown on Form 1099-R is from your IRA (or
SEP-IRA), the small box in box 7 (labeled IRA/SEP) should be checked.
WITHHOLDING. Federal income tax is withheld from IRA distributions unless you
choose not to have tax withheld. (See also, ROLLOVER FROM EMPLOYER'S PLAN INTO
AN IRA, in Chapter 5.) The tax withheld from an annuity or a similar periodic
payment is based on your marital status and the number
Page 30 Chapter 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA?
<PAGE>
of withholding allowances you claim on your withholding certificate (Form
W-4P). If you have not filed a certificate, the tax withheld will be
determined by treating you as a married individual claiming three withholding
allowances.
Generally, tax will be withheld at a 10% rate on lump-sum distributions.
WITHHOLDING FROM IRA DISTRIBUTIONS OUTSIDE THE UNITED STATES.
In general, if you are a U.S. citizen or resident alien and your home address
is outside the United States or its possessions, you cannot choose exemption
from withholding on your IRA distributions.
To choose exemption from withholding on your IRA, you must:
- - Give the payer of the IRA distributions your home address in the United
States or in a U.S. possession, or
- - Certify under penalties of perjury that you are not a U.S. citizen, a resident
alien of the United States, or a tax-avoidance expatriate.
OTHERWISE, THE PAYER MUST WITHHOLD TAX.
For more information, see WITHHOLDING ON PENSIONS AND ANNUITIES in
Publication 505, TAX WITHHOLDING AND ESTIMATED TAX. See also Publication 515,
WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.
REPORTING TAXABLE DISTRIBUTIONS ON YOUR RETURN. Report fully taxable
distributions, including premature distributions, on line 15b, Form 1040 (no
entry is required on line 15a) or line 10b, Form 1040A. If only part of the
distribution is taxable, enter the total amount on line 15a, Form 1040 (or line
10a, Form 1040A) and the taxable part on line 15b (or 10b). You cannot report
distributions on Form 1040EZ.
ESTATE TAX. For information on how estate tax laws relate to certain IRAs, get
Publication 448, FEDERAL ESTATE AND GIFT TAXES.
<TABLE>
<CAPTION>
FORM 1040
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INCOME
Attach Copy B of your Forms W-2, W-2G, and 1099-R here.
If you did not get a W-2, see page 15.
Enclose, but do not attach, any payment with your return.
7 Wages, salaries, tips, etc. Attach Form(s) W-2 7
------------------
8a Taxable interest income (see page 15). Attach Schedule B if over $400 8a
------------------
b Tax-exempt interest (see page 16). DON'T include on line 8a 8b
-------------------------------
9 Dividend income. Attach Schedule B if over $400 9
------------------
10 Taxable refunds, credits, or offsets of state and local income taxes (see page 16) 10
------------------
11 Alimony received 11
------------------
12 Business income or (loss). Attach Schedule C or C-EZ 12
------------------
13 Capital gain or (loss). If required, attach Schedule D (see page 16) 13
------------------
14 Other gains or (losses). Attach Form 4797 14
------------------
15a Total IRA distributions . 15a b Taxable amount (see page 17) 15b
-------------------------------- ------------------
16a Total pensions and annuities 16a b Taxable amount (see page 17) 16b
-------------------------------- ------------------
17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17
------------------
18 Farm income or (loss). Attach Schedule F. . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
19 Unemployment compensation (see page 18). . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
20a Social security benefits 20a b Taxable amount (see page 18) 20b
-------------------------------- ------------------
21 Other income. List type and amount--see page 18 . . . . . . . . . . . . . . . . . . . . . . 21
------------------
22 Add the amounts in the far right column for lines 7 through 21. This is your total income -> 22
</TABLE>
<TABLE>
<CAPTION>
FORM 1040A
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FIGURE YOUR TOTAL INCOME
Attach Copy B of your Forms W-2 and 1099-R here.
If you didn't get a W-2, see page 25.
Enclose, but do not attach, any payment with your return.
7 Wages, salaries, tips, etc. This should be shown in box 1 of your W-2
form(s). Attach Form(s) W-2. 7
- --------------------------------------------------------------------------------------------------------------------
8a Taxable interest income (see page 25). If over $400, attach
Schedule 1. 8a
----------------------------------------------------------------------------------------------------------------
b Tax-exempt intest. DO NOT include on line 8a. 8b
- -----------------------------------------------------------------------------
9 Dividends. If over $400, attach Schedule 1. 9
- --------------------------------------------------------------------------------------------------------------------
10a Total IRA 10b Taxable amount
distributions. 10a (see page 26). 10b
- --------------------------------------------------------------------------------------------------------------------
11a Total pensions 11a Taxable amount
and annuities 11a (see page 27). 11b
- --------------------------------------------------------------------------------------------------------------------
12 Unemployment compensation (see page 30). 12
- --------------------------------------------------------------------------------------------------------------------
13a Social security 13b Taxable amount
benefits 13a (see page 31). 13b
- --------------------------------------------------------------------------------------------------------------------
14 Add lines 7 thorugh 13b (far right column). This is your total income.-> 14
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Chapter 6 WHEN CAN I WITHDRAW OR USE ASSETS FROM AN IRA? Page 31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
WHAT ACTS RESULT IN PENALTIES?
The tax advantages of using IRAs for retirement savings can be offset by
additional taxes and penalties if you do not follow the rules. For example,
there are additions to the regular tax for using your IRA funds in prohibited
transactions. There are also additional taxes for:
- - Making excess contributions,
- - Making early withdrawals (taking premature distributions),
- - Allowing excess amounts to accumulate (failing to make required withdrawals),
or
- - Receiving excess distributions.
There are penalties for overstating the amount of nondeductible
contributions and for failure to file Form 8606, NONDEDUCTIBLE IRAS
(CONTRIBUTIONS, DISTRIBUTIONS, AND BASIS), if required.
This chapter discusses those acts that you should avoid and the additional
taxes and other costs, including loss of IRA status, that apply if you don't.
- --------------------------------------------------------------------------------
PROHIBITED TRANSACTIONS
Generally, a prohibited transaction is any improper use of your IRA account or
annuity by you or any DISQUALIFIED PERSON.
Some examples of disqualified persons for this purpose are:
Your fiduciary, or
Members of your family (spouse, ancestor, lineal descendant and any spouse
of a lineal descendant).
Some examples of prohibited transactions with an IRA are:
1) Borrowing money from it,
2) Selling property to it,
3) Receiving unreasonable compensation for managing it,
4) Using it as security for a loan, and
5) Buying property for personal use (present or future) with IRA funds.
EFFECT ON AN IRA ACCOUNT. Generally, if YOU OR YOUR BENEFICIARY engage in a
prohibited transaction in connection with your IRA account at any time during
the year, IT WILL NOT BE TREATED AS AN IRA as of the first day of the year.
EFFECT ON YOU (OR YOUR BENEFICIARY). If you (or your beneficiary) engage in a
prohibited transaction in connection with your IRA account at any time during
the year, you (or your beneficiary) must include the fair market value of all
(or part, in certain cases) of the IRA assets in your gross income for that
year. The fair market value is the price at which the IRA assets would change
hands between a willing buyer and a willing seller, when neither has any need to
buy or sell, and both have reasonable knowledge of the relevant facts.
You must use the fair market value of the assets as of the first day of the
year you engaged in the prohibited transaction. You may also have to pay the 10%
tax on premature distributions and the 15% tax on excess distributions,
discussed later.
BORROWING ON AN ANNUITY CONTRACT. If you borrow money against your IRA
annuity contract, you must include in your gross income the fair market value
of the annuity contract as of the first day of your tax year. You may also
have to pay the 10% additional tax on premature distributions and the 15% tax
on excess distributions discussed later.
PLEDGING AN ACCOUNT AS SECURITY. If you use a part of your IRA account
as security for a loan, THAT PART is treated as a distribution and is
included in your gross income. You may have to pay the 10% additional tax on
premature distributions, and the 15% tax on excess distributions discussed
later.
TRUST ACCOUNT SET UP BY AN EMPLOYER OR AN EMPLOYEE ASSOCIATION. Your account or
annuity DOES NOT LOSE ITS IRA TREATMENT IF your employer or employee
association, with whom you have your IRA, engages in a prohibited transaction.
IF YOU PARTICIPATE in the prohibited transaction with your employer or
association, your account is no longer treated as an IRA.
EXCISE TAXES. If someone other than the owner or beneficiary of an IRA engages
in a prohibited transaction, that person may be liable for certain excise taxes.
In general, there is a 5% tax on the amount of the prohibited transaction, and a
100% additional tax if the transaction is not corrected.
IF THE IRA CEASES TO BE AN IRA because of a prohibited transaction by you
(or your beneficiary), you (or your beneficiary) are not liable for these excise
taxes. However, you (or your beneficiary) may have to pay other taxes as
discussed above under EFFECT ON YOU (OR YOUR BENEFICIARY).
OTHER ACTS TO AVOID
The following acts are also prohibited:
INVESTMENT IN COLLECTIBLES. If your IRA invests in collectibles, the amount
invested is considered distributed
Page 32 Chapter 7 WHAT ACTS RESULT IN PENALTIES?
<PAGE>
to you in the year invested. You may also have to pay the 10% tax on premature
distributions, the 15% tax on excess distributions, and the excise taxes
discussed earlier.
COLLECTIBLES include art works, rugs, antiques, metals, gems, stamps,
coins, alcoholic beverages, and certain other tangible personal property.
EXCEPTION. Your IRA can invest in one, one-half, one-quarter, or one-tenth
ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury
Department.
EXEMPTIONS
Certain transactions that have been viewed previously as prohibited
transactions, have been granted exemption from prohibited transaction penalties
by the Department of Labor. Recently, exemptions have been granted for the
following, if they meet the requirements for exemption:
- - Payments by an IRA sponsor of cash, property, or other consideration to an
individual (or members of his family) for whose benefit the IRA is
established or maintained.
- - Receipt of services from a bank at reduced or no cost by an individual for
whose benefit an IRA is established or maintained.
EXEMPTION FOR PAYMENTS OF CASH, PROPERTY, OR OTHER CONSIDERATION. The following
requirements must be satisfied for this exemption to apply:
1) The payments must be given for establishing an IRA or for making additional
contributions to it;
2) The IRA must be established solely to benefit you, your spouse, and
beneficiaries (yours and your spouse's);
3) During the year the total of the fair market value of the payments you
receive cannot exceed:
a) $10 for IRA deposits of less than $5,000, or
b) $20 for IRA deposits of $5,000 or more;
4) If the consideration you are provided is group term life insurance, then the
previous two conditions do not apply provided that no more than $5,000 of the
face value of the insurance is based on a dollar for dollar basis on the
assets in your IRA.
EXEMPTION FOR SERVICES YOU RECEIVE AT REDUCED OR NO COST. After May 11, 1993,
the following conditions must be satisfied for this exemption to apply:
1) The IRA taken into account for purposes of qualifying to receive the
services must be established and maintained for the benefit of you, your
spouse, or beneficiaries (yours and your spouse's).
2) The services must be services the bank itself can legally offer.
3) The services must be provided in the ordinary course of business by the
bank (or a bank affiliate) to customers who qualify but do not maintain an
IRA (or a Keogh plan).
4) For an IRA, the determination of who qualifies for these services must be
based on an IRA (or a Keogh plan) deposit balance equal to the lowest
qualifying balance for any other type of account.
5) The rate of return on an IRA investment that qualifies cannot be less than
the return on an identical investment that could have been made at the same
time at the same branch of the bank by a customer who is not eligible for
(or does not receive) these services.
- --------------------------------------------------------------------------------
EXCESS CONTRIBUTIONS
Generally, an excess contribution is the amount contributed to your IRAs that is
more than the smaller of the following amounts:
1) Your taxable compensation for the year, or
2) $2,000.
The taxable compensation limit applies whether your contributions are deductible
or nondeductible.
CONTRIBUTIONS FOR THE YEAR YOU REACH AGE 70 1/2 and any later year are also
excess contributions.
An excess contribution could be the result of your contribution, your
spouse's contribution, your employer's contribution, or an improper rollover
contribution. If your employer makes contributions on your behalf to a SEP-IRA,
see Chapter 8, SIMPLIFIED EMPLOYEE PENSION (SEP).
TAX ON EXCESS CONTRIBUTIONS. If the excess contribution for a year is not
withdrawn by the date your return for the year is due (including extensions) as
explained later, you are subject to a 6% tax. You must pay the 6% tax each year
on excess amounts that remain in your IRA at the end of your tax year. The
excess is taxed for the year of the excess contribution and for each year after
that, until you correct it. The tax cannot be more than 6% of the value of your
IRA as of the end of your tax year.
The excise tax is figured on FORM 5329. For information on filing Form 5329,
see REPORTING ADDITIONAL TAXES, later.
EXAMPLE. For 1994, Paul Jones is single, his compensation is $31,000, and he
contributed $2,500 to his IRA. Paul has made an excess contribution to his IRA
of $500 ($2,500 minus the $2,000 limit). The contribution earned $5 interest in
1994 and $6 interest in 1995 before the due date of the return, including
extensions. He does not withdraw the $500 or the interest it earned by the due
date of his return, including extensions.
Paul figures his excess contribution tax by multiplying the excess
contribution ($500) shown on line 12, Form 5329, by .06, giving him an
additional tax liability of $30. He enters the tax on line 13, Form 5329, and on
line 51,
Chapter 7 WHAT ACTS RESULT IN PENALTIES? Page 33
<PAGE>
Form 1040. See Paul's filled-in Form 5329 in Appendix C, later.
EXCESS CONTRIBUTIONS YOU WITHDRAW BY THE DATE YOUR RETURN IS DUE. You will not
have to pay the 6% tax if you withdraw an excess contribution made during a tax
year AND interest or other income earned on it by the date your tax return for
that year is due, including extensions.
DO NOT INCLUDE in your gross income an excess contribution that you withdraw
from your IRA before your tax return is due if:
1) No deduction was allowed for the excess contribution, and
2) The interest or other income earned on the excess was also withdrawn.
However, YOU MUST INCLUDE in your gross income the interest or other income that
was earned on the excess contribution. Report it on your return for the year in
which the excess contribution was made. Your withdrawal of interest or other
income may be subject to an additional 10% tax on early withdrawals, discussed
later.
FORM 1099-R. You will receive Form 1099-R indicating the amount of the
withdrawal. If the excess contribution was made in a previous tax year, these
forms will indicate the year in which the earnings are taxable.
EXCESS CONTRIBUTIONS YOU WITHDRAW AFTER YOUR RETURN IS DUE. If the total
contributions (other than rollover contributions) for the year to your IRA are
$2,250 or less, and there are no employer contributions for the year, you can
withdraw any excess contribution after the due date for filing your tax return
for that year, including extensions, and not include the amount withdrawn in
your gross income. This applies only to the part of the excess for which you did
not take a deduction. The 6% tax applies to the excess contribution amount that
remains in your IRA at the end of a year (this includes the year of the
contribution and any later year).
EXCESS CONTRIBUTION DEDUCTED IN AN EARLIER YEAR. If you deducted an excess
contribution in an earlier year for which the total contributions were $2,250 or
less, and for which there were no employer contributions, you can still remove
the excess from your IRA and not include it in your gross income. To do this,
file Form 1040X, AMENDED U.S. INDIVIDUAL INCOME TAX RETURN, for that year and do
not deduct the excess contribution on the amended return. Generally, you can
file an amended return within 3 years after you filed your return, or 2 years
from the time the tax was paid, whichever is later.
EXCESS DUE TO INCORRECT ROLLOVER INFORMATION. If an excess contribution in
your IRA is the result of a rollover, and the excess occurred because you had
incorrect information required to be supplied by the plan, you can withdraw the
excess contribution. The $2,250 limit, mentioned above, is increased by the
amount of the excess that is due to the incorrect information. You will have to
amend your return for the year in which the excess occurred to correct the
reporting of the rollover amounts in that year. Do not include in your gross
income, in the year you withdraw it, the excess contribution that was the result
of the incorrect information.
TAKING A DEDUCTION IN A LATER YEAR FOR AN EXCESS CONTRIBUTION. You cannot reduce
an excess by applying it against an earlier year in which less than the maximum
amount allowable was contributed. But you can apply it to a later year if the
contributions for that later year are less than the maximum allowed for that
year.
You can deduct from your gross income, in the first available tax year, the
amount of the excess contributions in your IRA, from preceding years, up to the
difference between the maximum amount that is deductible in the year and the
amount actually contributed during the year.
This method lets you avoid making a withdrawal. It does not, however, let you
avoid the 6% tax on any excess contributions remaining at the end of a tax year.
EXAMPLE. Terry was entitled to contribute to her IRA and deduct $1,000 in
1993 and $1,500 in 1994, the amounts of her taxable compensation for these
years. In 1993, she actually contributed $1,400 but could deduct only $1,000. In
1993, $400 is an excess contribution, subject to the 6% tax. However, she would
not have to pay the 6% tax if she withdrew the excess (including any earnings)
before the due date of her 1993 return. Since Terry did not withdraw the excess,
she owes excise tax of $24 for 1993. To avoid the excise tax for 1994, she can
correct the $400 excess amount from 1993 in 1994 if her actual contributions are
only $1,100 in 1994 (the allowable deductible contribution of $1,500 minus the
$400 excess from 1993 she wants to treat as a deductible contribution in 1994).
Terry can deduct $1,500 in 1994 (the $1,100 actually contributed plus the $400
excess contribution from 1993).
CLOSED TAX YEAR. A special rule applies if you incorrectly deducted part of
the excess contribution in a closed tax year (one for which the period to assess
a tax deficiency has expired). The amount allowable as an IRA deduction for a
later correction year (the year you contribute less than the allowable amount)
must be reduced by the amount of the excess contribution deducted in the closed
year.
- --------------------------------------------------------------------------------
PREMATURE DISTRIBUTIONS
(EARLY WITHDRAWALS)
You must include in your gross income premature distributions (sometimes called
early withdrawals or early distributions) from your IRA. They are also subject
to an additional tax, as discussed below.
Premature distributions are amounts you withdraw from your IRA account or
annuity before you are age 59 1/2, or amounts you receive when you cash in
retirement bonds before you are age 59 1/2.
Page 34 Chapter 7 WHAT ACTS RESULT IN PENALTIES?
<PAGE>
EXCEPTIONS. In certain circumstances, the additional tax does not apply to
distributions from your IRA, even though they are made before you are
age 59 1/2. There are exceptions for:
- - Disability,
- - Death, and
- - Annuity distributions.
The exceptions are discussed in detail near the beginning of Chapter 6 under
EXCEPTIONS.
RECEIVERSHIP DISTRIBUTIONS. Premature distributions (with or without your
consent) from savings institutions placed in receivership are subject to this
tax unless one of the exceptions discussed above applies. This is true even if
the distribution is from a receiver that is a state agency.
ADDITIONAL TAX. The additional tax on premature distributions is equal to 10% of
the amount of the premature distribution that you must include in your gross
income. This tax is in addition to any regular income tax that is due.
Use FORM 5329 to figure the tax. See the discussion of Form 5329, later,
under REPORTING ADDITIONAL TAXES, for information on filing the form.
EXAMPLE. Tom, who is 35 years old, withdraws $3,000 from his IRA account. The
$3,000 is a premature distribution. Tom must include the $3,000 in his gross
income for that year and pay income tax on it. Tom must also pay an additional
tax of $300 (10% x $3,000). See the filled-in Form 5329, in Appendix C.
NONDEDUCTIBLE CONTRIBUTIONS. The tax on premature distributions does not apply
to the part of a distribution that represents a return of your nondeductible
contributions (basis).
ROLLOVERS. Distributions that are rolled over, as discussed in Chapter 5, can be
made without your having to pay the regular income tax or the 10% additional
tax.
- --------------------------------------------------------------------------------
EXCESS ACCUMULATIONS (INSUFFICIENT DISTRIBUTIONS)
Amounts contributed to your IRA cannot be kept in it indefinitely. In general,
you must begin receiving distributions by April 1 of the year following the year
in which you reach age 70 1/2. The required minimum distribution for any year
after your 70 1/2 year must be made by December 31 of that later year.
TAX ON EXCESS. If distributions are less than the required MINIMUM
DISTRIBUTION for the year, discussed in Chapter 6, you may have to pay a 50%
EXCISE TAX for the year on the amount not distributed as required.
REPORTING THE TAX. Use FORM 5329 to report the tax on excess accumulations. See
the discussion of Form 5329, later, under REPORTING ADDITIONAL TAXES, for more
information on filing the form.
REQUEST TO EXCUSE THE TAX. If the excess accumulation is due to reasonable
error, and you have taken, or are taking, steps to remedy the insufficient
distribution, you can request that the tax be excused.
HOW TO FILE THE REQUEST. File Form 5329 with your Form 1040 and pay any tax
you owe on excess accumulations. Attach an explanation for the excess
accumulation and show when you removed the excess or what you have done that
will result in its withdrawal.
If the IRS approves your request, it will refund the excess accumulations tax
you paid.
EXEMPTION FROM TAX. If you are unable to make required distributions because you
have an IRA invested in a contract issued by an insurance company that is in
state insurer delinquency proceedings, the 50% excise tax does not apply if the
CONDITIONS and REQUIREMENTS of Revenue Procedure 92-10 are satisfied. Those
conditions and requirements are summarized below. You can read the full text of
the revenue procedure at most IRS offices and at many public libraries.
CONDITIONS. To qualify for exemption from the tax, the assets in your IRA
must include an AFFECTED INVESTMENT. Also, the amount of your required
distribution must be determined as discussed in Chapter 6.
AFFECTED INVESTMENT means an annuity contract or a guaranteed investment
contract (with an insurance company) for which payments under the terms of the
contract have been reduced or suspended because of state insurer delinquency
proceedings against the contracting insurance company.
REQUIREMENTS. If your IRA (or IRAs) includes other assets in addition to your
affected investment, all IRA assets, including the AVAILABLE PORTION of your
affected investment, must be used to satisfy, to the extent possible, your IRA
distribution requirement. If the affected investment is the only asset in your
IRA, the required distribution, to the extent possible, must come from the
available portion, if any, of your affected investment.
AVAILABLE PORTION. The available portion of your affected investment is the
amount of payments remaining after they have been reduced or suspended because
of state insurer delinquency proceedings.
MAKE UP OF SHORTFALL IN DISTRIBUTION. If the payments to you under the
contract increase because all or part of the reduction or suspension is
canceled, you must make up the amount of any shortfall in a prior distribution
because of the proceedings. You make up (reduce or eliminate) the shortfall with
the increased payments you receive.
You must make up the shortfall no later than December 31 of the calendar year
following the year that you receive increased payments.
Chapter 7 WHAT ACTS RESULT IN PENALTIES? Page 35
<PAGE>
- --------------------------------------------------------------------------------
EXCESS DISTRIBUTIONS
If you received RETIREMENT DISTRIBUTIONS during the year of more than $150,000,
you may have to pay a 15% tax ON THE DISTRIBUTIONS EXCEEDING THAT AMOUNT. The
term RETIREMENT DISTRIBUTIONS means your distributions from any qualified
employer plan (including a tax-sheltered annuity plan), or IRA.
Use Form 5329 to figure the tax. See the discussion of Form 5329, later,
under REPORTING ADDITIONAL TAXES.
THIS EXCISE TAX IS REDUCED BY any tax on premature distributions that applies
to the excess distribution. See PREMATURE DISTRIBUTIONS, discussed earlier.
EXCLUDED DISTRIBUTIONS. The excess distribution tax does not apply to the
following distributions:
1) Distributions after the death of the IRA owner (or employee in the case of
employer plans),
2) Distributions that are rolled over,
3) Distributions that represent nondeductible contributions,
4) Distributions to an alternate payee under a qualified domestic relations
order, if includable in the alternate payee's income,
5) Corrective distributions of excess deferrals under a salary reduction
arrangement (or a similar qualified plan) discussed in Chapter 8,
6) Corrective distributions of excess contributions and excess aggregate
contributions, and
7) Corrective distributions of excess annual additions.
COMBINING DISTRIBUTIONS. If distributions with regard to a person are made to
that person and others, the distributions must be combined to figure the amount
of excess distributions for the year.
SPECIAL LIMITATION ON TAX. On a return filed for a tax year ended before January
1, 1989, you could have chosen not to pay the 15% tax on the part of any
distribution that is related to your accrued benefits on August 1, 1986. This
rule APPLIES ONLY IF the accrued benefit as of August 1, 1986, exceeded
$562,500.
However, if you made this choice to exclude from the tax on excess
distributions a distribution amount allocable to your August 1, 1986, benefit
accruals, your other retirement distributions are subject to the tax to the
extent they are more than $148,500 for 1994 (instead of $150,000). Furthermore,
this $148,500 amount is reduced (but not below zero) by any distributions
received during the year that are allocable to the August 1, 1986, benefit
accruals.
If you did not elect to apply this rule, then the 15% tax will apply to the
part of the distribution that exceeds $150,000.
INCREASE IN ESTATE TAX. For decedents dying after December 31, 1986, the estate
tax will be increased by 15% of the excess retirement accumulation. A person's
excess retirement accumulation, if any, is the value of the decedent's interests
in all qualified employee plans, tax-sheltered annuities, qualified annuity
plans, individual retirement accounts, and any other plans that the Internal
Revenue Service may include, OVER the "present value" of a single life annuity
with payments equal to the annual ceiling ($150,000), and payable for a period
equal to the decedent's life expectancy immediately before death. The tax may
not be offset by any credits against the estate tax, such as the unified credit.
- --------------------------------------------------------------------------------
REPORTING ADDITIONAL TAXES
Generally you must use FORM 5329 to report the tax on excess contributions,
premature (early) distributions, excess distributions, and excess accumulations.
YOU MUST FILE FORM 5329 IF YOU receive excess distributions from a qualified
retirement plan, whether or not you owe tax on them.
YOU DO NOT HAVE TO USE FORM 5329 IF:
- - Distribution code 1 (early distribution) is shown in box 7 of Form 1099-R.
Instead, multiply the taxable part of the early distribution by 10% and enter
the result on line 51 of Form 1040. HOWEVER, if you owe this tax and also owe
any other additional tax on a distribution, do not enter this 10% additional
tax directly on your Form 1040. You must file Form 5329 to report your
additional taxes.
- - You qualify for an exception to the premature distributions tax. You need not
report the exception if distribution code 2, 3, or 4 is shown in box 7 of
Form 1099-R. HOWEVER, if one of those codes is not shown, or the code shown
is incorrect, you must file Form 5329 to report the exception.
- - You properly rolled over all distributions you received during the year.
IF YOU FILE FORM 1040, complete Form 5329 and attach it to your Form 1040. Enter
the total amount of IRA tax due on line 51, Form 1040.
IF YOU DO NOT HAVE TO FILE A FORM 1040 but do have to pay one of the IRA taxes
mentioned earlier, file the completed Form 5329 with IRS at the time and place
you would have filed Form 1040. Include a check or money order payable to
Internal Revenue Service for the tax you owe, as shown on Form 5329. Write your
social security number, tax form number, and tax year on your check or money
order.
Page 36 Chapter 7 WHAT ACTS RESULT IN PENALTIES?
<PAGE>
- -----------------------------------------------------------------
8.
- -----------------------------------------------------------------
SIMPLIFIED EMPLOYEE PENSION (SEP)
A simplified employee pension (SEP) is a written arrangement (a plan) that
allows an employer to make contributions toward his or her own (if a
SELF-EMPLOYED INDIVIDUAL) and employees' retirement, without becoming
involved in more complex retirement plans. The contributions are made to IRAs
(SEP-IRAs) of the participants in the plan. Under a SEP, IRAs are set up for,
at a minimum, each QUALIFYING EMPLOYEE (defined below). IRAs may have to be
set up for LEASED EMPLOYEES (defined below), but they do not have to be set
up for EXCLUDABLE EMPLOYEES (defined below).
An employer can use FORM 5305-SEP to satisfy the written arrangement
requirement for a SEP. A SEP can be established at any time during a year.
However, the time for making contributions for a year under a SEP agreement
is limited. See TIME LIMIT FOR CONTRIBUTIONS, later.
NOTE. The SEP plan under which contributions are made can be set up after
the close of the year for which contributions are made. However, the plan
must exist at the time the contributions are made and they must be made
within the time limit.
An employer who signs a SEP agreement does not have to make any
contribution to the SEP-IRAs that are set up. But, if the employer does make
contributions, the contributions must be based on a written allocation
formula and must not discriminate in favor of HIGHLY COMPENSATED EMPLOYEES
(defined below).
- -----------------------------------------------------------------
DEFINITIONS
A SELF-EMPLOYED INDIVIDUAL is an employee for SEP purposes. He or she is also
the employer. Even if the self-employed individual is the only qualifying
employee, he or she can have a SEP-IRA.
A QUALIFYING EMPLOYEE is one who:
Is at least 21 years old,
Has worked for the employer during at least 3 of the 5 years
immediately preceding the tax year, and
Has received from the employer at least $396 in compensation
in the tax year.
NOTE. An employer can establish less restrictive participation
requirements for its employees than those listed, but not more restrictive
ones.
LEASED EMPLOYEES. The person or firm for whom you perform services (the
recipient) may have to include you in a SEP if you are a "leased employee"
and are treated as an employee of the recipient. A leased employee is any
person who is not an employee of the recipient and who is hired by a leasing
organization, but who performs services for another (the recipient of the
services). You are a leased employee if:
1) Your services are provided under an agreement between the
recipient and the leasing organization,
2) Your services are performed for the recipient, or for the
recipient and related persons, on a substantially full-time
basis, for a period of at least one year, and
3) Your services are of a type historically performed by
employees in the recipient's field of business.
For more information on leased employees, see the discussion in
Publication 560.
EXCLUDABLE EMPLOYEES. The following employees can be excluded from coverage
under a SEP:
Employees covered by a union agreement and whose retirement benefits were
bargained for in good faith by their union and their employer, and
Nonresident alien employees who have no U.S. source earned
income from their employer. For more information about
nonresident aliens, see Publication 519, U.S. TAX GUIDE FOR ALIENS.
A HIGHLY COMPENSATED EMPLOYEE is an employee who during the year
or preceding year:
1) Owns more than 5% of the capital or profits interest in the
employer (if not a corporation); or more than 5% of the
outstanding stock or more than 5% of the total voting power
of all stock of the employer corporation;
2) Received annual compensation from the employer of more than $99,000;
3) Received annual compensation from the employer of more than
$66,000 and was a member of the top-paid group (20%) of
employees during the year; or
4) Is an officer whose annual compensation exceeds $59,400.
- -----------------------------------------------------------------
CONTRIBUTIONS
The SEP rules permit an employer to contribute (and deduct) each year to each
participating employee's SEP-IRA up to 15% of the employee's compensation OR
$30,000, whichever is less. These contributions are funded by the employer.
FIGURING THE 15% LIMIT. For purposes of determining the 15%
limit, COMPENSATION is generally limited to
Chapter 8 SIMPLIFIED EMPLOYEE PENSION (SEP) Page 37
<PAGE>
$150,000, NOT INCLUDING your employer's contribution to your SEP-IRA.
NOTE. For employees in a collective bargaining unit covered by a SEP for
which the $150,000 limit is not effective for the plan year beginning in
1994, the compensation limit is $242,280.
EXAMPLE. Barry's nonunion employer has a SEP for its employees. Barry's
compensation for 1994, before his employer's contribution to his SEP-IRA, was
$160,000. Barry's employer can contribute up to $22,500 (15% X $150,000) to
Barry's SEP-IRA.
DEDUCTION LIMIT FOR A SELF-EMPLOYED PERSON. If you are self-employed and
contribute to your own SEP-IRA, special rules apply when figuring your
maximum deduction for these contributions.
FOR DETERMINING THE 15% LIMIT ON CONTRIBUTIONS, discussed above, your
COMPENSATION is your NET EARNINGS FROM SELF-EMPLOYMENT. See NET EARNINGS FROM
SELF-EMPLOYMENT, below. Note that, for SEP purposes, your net earnings
(compensation) must take into account your deduction for contributions to
your own SEP-IRA. Because your deduction amount and your net earnings amount
are each dependent on the other, this adjustment presents a problem.
To solve this problem, you make the adjustment to net earnings indirectly
by, in figuring your maximum deduction, reducing the contribution rate called
for in the plan. Use the following worksheets to find this reduced
contribution rate and your maximum deduction. Make no reduction to the
contribution rate for any common-law employees.
SELF-EMPLOYED PERSON'S RATE WORKSHEET
1) Plan contribution rate as a decimal (for example,
10 1/2% would be 0.105)..............................
---------
2) Rate in line 1 plus one (for example, 0.105
plus one would be 1.105).............................
---------
3) Self-employed rate as a decimal (divide line 1
by line 2) ..........................................
---------
---------
SELF-EMPLOYED PERSON'S DEDUCTION WORKSHEET
STEP 1
Enter your rate from the SELF-EMPLOYED PERSON'S
RATE WORKSHEET....................................
---------
STEP 2
Enter your net earnings from line 3, Schedule C-EZ
(Form 1040), line 31, Schedule C (Form 1040),
line 36, Schedule F (Form 1040), or line 15a,
Schedule K-1 (Form 1065)........................ $
---------
STEP 3
Enter your deduction for self-employment tax from
line 25, Form 1040................................. $
---------
STEP 4
Subtract Step 3 from Step 2 and enter the
result............................................. $
---------
STEP 5
Multiply Step 4 by Step 1 and enter the
result............................................. $
---------
STEP 6
Multiply $150,000 by your plan contribution rate.
Enter the result but not more than $30,000......... $
---------
STEP 7
Enter the smaller of Step 5 or Step 6. This is
your MAXIMUM DEDUCTIBLE CONTRIBUTION. Enter your
deduction on line 27, Form 1040.................... $
---------
---------
EXAMPLE. You are a sole proprietor and have employees. The terms of your
plan provide that you contribute 10 1/2% (.105) of your compensation, and 10
1/2% of your common-law employees' compensation. Your net earnings from line
31, Schedule C (Form 1040) is $200,000. In figuring this amount, you deducted
your common-law employees' compensation of $100,000 and contributions for
them of $10,500 (10 1/2% x $100,000). This net earnings amount is now reduced
to $193,565 by subtracting your self-employment tax deduction of $6,435. You
figure your self-employed rate and maximum deduction for employer
contributions on behalf of yourself as follows:
SELF-EMPLOYED PERSON'S RATE WORKSHEET
1) Plan contribution rate as a decimal (for example,
10 1/2% would be 0.105)........................... 0.105
---------
2) Rate in line 1 plus one, (for example, 0.105
plus one would be 1.105)............................. 1.105
---------
3) Self-employed rate as a decimal (divide line 1
by line 2) .......................................... 0.0950
---------
---------
SELF-EMPLOYED PERSON'S DEDUCTION WORKSHEET
STEP 1
Enter your rate from the SELF-EMPLOYED PERSON'S
RATE WORKSHEET..................................... 0.0950
---------
STEP 2
Enter your net earnings from line 3, Schedule
C-EZ (Form 1040), line 31, Schedule C (Form 1040),
line 36, Schedule F (Form 1040), or line 15a,
Schedule K-1 (Form 1065)........................... $ 200,000
---------
Page 38 Chapter 8 SIMPLIFIED EMPLOYEE PENSION (SEP)
<PAGE>
STEP 3
Enter your deduction for self-employment tax from
line 25, Form 1040................................. $ 6,435
--------
STEP 4
Subtract Step 3 from Step 2 and enter the result... $193,565
--------
STEP 5
Multiply Step 4 by Step 1 and enter the result..... $ 18,389
--------
STEP 6
Multiply $150,000 by your plan contribution rate.
Enter the result but not more than $30,000........ $ 15,750
--------
STEP 7
Enter the smaller of Step 5 or Step 6. This is
your MAXIMUM DEDUCTIBLE CONTRIBUTION. Enter your
deduction on line 27, Form 1040. $ 15,750
--------
--------
NET EARNINGS FROM SELF-EMPLOYMENT. For SEP purposes, your net earnings are
your gross income from your business minus allowable deductions for that
business. Allowable deductions include contributions to your employees'
SEP-IRAs. You also take into account the deduction allowed for one-half of
your self-employment tax, and the deduction for contributions to your own
SEP-IRA. Net earnings do not include tax-free items (or deductions related to
them), but do include foreign earned income and housing cost amounts. Net
earnings include a partner's distributive share of partnership income or loss
(other than separately treated items such as capital gains or losses). If
paid for services to or for the partnership, net earnings include guaranteed
payments to a limited partner. They do not include distributions of income or
loss to a limited partner.
TIME LIMIT FOR CONTRIBUTIONS. To deduct contributions for a year, the
employer must make the contributions not later than the due date (including
extensions) of the employer's return for the year.
OVERALL LIMIT -- EMPLOYER WITH DEFINED CONTRIBUTION AND SEP PLANS. If an
employer contributes to a defined contribution retirement plan (a plan under
which an individual account is set up for each participant), annual additions
to an account are limited to the lesser of (1) $30,000 or (2) 25% of the
participant's compensation. Moreover, for purposes of these limits,
contributions to more than one such plan must be added. Since a SEP is
considered a defined contribution plan for purposes of these limits, employer
contributions to a SEP must be added to other contributions to defined
contribution plans.
TAX TREATMENT OF EMPLOYER'S CONTRIBUTIONS
Unlike your contributions to IRAs, contributions to your SEP-IRA by your
employer are EXCLUDED from your income rather than deducted from it. Your
employer's contributions to your SEP-IRA should not be included in your wages
on your Form W-2, WAGE AND TAX STATEMENT, unless there are contributions in
excess of the limit that applies, or unless there are contributions under a
salary reduction arrangement.
CONTRIBUTIONS UNDER A SALARY REDUCTION ARRANGEMENT. Form W-2 should
include contributions under a salary reduction arrangement (discussed later)
for social security and Medicare tax purposes only.
IF THERE ARE NO EXCESS CONTRIBUTIONS, you do not include any contributions
in your gross income; nor do you deduct any of them.
IF THERE ARE EXCESS EMPLOYER CONTRIBUTIONS, you must include them in your
gross income, without any offsetting deduction, and your Form W-2 should
include the amount.
EXCESS EMPLOYER CONTRIBUTIONS YOU WITHDRAW BEFORE YOUR RETURN IS DUE. If your
employer contributes more to your SEP-IRA than 15% of your compensation or
$30,000, whichever is less, you will not have to pay the 6% tax (discussed in
Chapter 7) on it if you withdraw this excess amount (and any interest or
other income earned on it) from your SEP-IRA before the date for filing your
tax return, including extensions. However, you may have to pay an additional
10% tax (discussed in Chapter 7) on the early withdrawal of the interest or
other income earned on the excess contribution.
EXCESS EMPLOYER CONTRIBUTIONS YOU WITHDRAW AFTER YOUR RETURN IS DUE. If
employer contributions for the year are $30,000 or less, you may withdraw any
excess employer contributions from your SEP-IRA after the due date for filing
your tax return, including extensions, free of the 10% tax on premature
distributions, discussed earlier. However, the excess contribution is subject
to the annual 6% excise tax. Also, you may have to pay the additional 10% tax
on the early withdrawal of interest or other income earned on the excess
contribution.
CONTRIBUTIONS YOU MAKE TO YOUR SEP-IRA
If you make contributions to your SEP-IRA independent of employer SEP
contributions, you can deduct them the same way as contributions to a regular
IRA. However, your deduction may be reduced or eliminated because, as a
participant in a SEP, you are covered by an employer retirement plan. See
Chapter 4, HOW MUCH CAN I CONTRIBUTE AND DEDUCT?
Chapter 8 SIMPLIFIED EMPLOYEE PENSION (SEP) Page 39
<PAGE>
EXCESS CONTRIBUTIONS YOU MAKE. For information on excess contributions you
make to your SEP-IRA independent of employer SEP contributions, see Chapter
7, WHAT ACTS RESULT IN PENALTIES?
TAX TREATMENT BY SELF-EMPLOYED INDIVIDUALS.
If you are self-employed (a sole proprietor or partner) and have a SEP plan,
take your deduction for employer contributions to your own SEP-IRA on line
27, Form 1040. If you also make deductible contributions to your SEP-IRA (or
any other IRA you own) independent of your employer contributions, take your
deduction on line 23, Form 1040.
For more employer information on SEP-IRAs get Publication 560.
- -----------------------------------------------------------------
SALARY REDUCTION ARRANGEMENT
A SEP may include a salary reduction arrangement. Under the arrangement, you
can elect to have your employer contribute part of your pay to your SEP-IRA.
Only the remaining portion of your pay is currently taxable. The tax on the
contribution is deferred. Thus, this choice is called an ELECTIVE DEFERRAL.
Form 5305A-SEP can be used by an employer to set up such an arrangement.
RESTRICTIONS ON ELECTION. You can choose elective deferrals only
if:
- - At least 50% of employees eligible to participate choose
elective deferrals,
- - There were no more than 25 eligible employees at any time
during the preceding year, and
- - The amount deferred each year by each eligible highly
compensated employee as a percentage of pay is no more than
125% of the average deferral percentage of all other eligible
employees (ADP TEST). Generally, compensation in excess of
$150,000 cannot be considered in figuring an employee's
deferral percentage.
NOTE. For collectively bargained SEPs for which the $150,000 limit is not
effective for the plan year beginning in 1994, the compensation limit for
covered bargaining unit employees is $242,280.
EXCEPTIONS. An elective deferral arrangement is not available for a SEP
maintained by a state or local government, or any of their political
subdivisions, agencies, or instrumentalities, or to a tax-exempt organization.
LIMITS ON DEFERRALS. In general, the total income you can defer under a
salary reduction arrangement included in your SEP and certain other elective
deferral arrangements, for 1994, is limited to $9,240. This limit applies
only to the amounts that represent a reduction from your salary, not to any
contributions from employer funds.
Elective deferrals, not exceeding the ADP test, are excluded from your
income in the year of deferral, but are included in wages for social
security, Medicare, and unemployment (FUTA) tax purposes.
OVERALL LIMITS ON SEP CONTRIBUTIONS
Contributions, including elective deferrals (salary reductions), made by your
employer to the SEP-IRA are subject to the overall limit of 15% of your
compensation (generally up to $150,000 for 1994) or $30,000, whichever is
less.
- -----------------------------------------------------------------
DISTRIBUTIONS (WITHDRAWALS)
An employer cannot prohibit withdrawals from a SEP-IRA. Also, an employer
cannot condition contributions to a SEP-IRA on the keeping of any part of
them in the account.
Distributions (withdrawals) from a SEP-IRA are subject to IRA rules. For
information on these rules, including tax treatment of distributions,
tax-free rollovers, required distributions, and income tax withholding, see
Chapter 6, WHEN CAN I WITHDRAW AND USE ASSETS FROM AN IRA?
Page 40 Chapter 8 SIMPLIFIED EMPLOYEE PENSION (SEP)
<PAGE>
Table 8.1. CONTRIBUTION/DISTRIBUTION QUICK REFERENCE CHART -- IRAS
AND SEPS
<TABLE>
<CAPTION>
CAN CONTRIBUTE FOR THE YEAR MAXIMUM CONTRIBUTION FOR MUST BEGIN DISTRIBUTIONS (1)
BY THE YEAR LIMITED TO: BY:
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
IRA Due date of return The lesser of $2000 or April 1 of the year following
(NOT including extensions) owner's taxable the year in which owner
compensation (2) reaches age 70 1/2
SEP-IRA Due date of return The lesser of $30,000 or April 1 of the year following
(including extensions) 15% of participant's the year in which owner
compensation (3) reaches age 70 1/2
</TABLE>
(1) The entire balance or periodic distributions of the balance. See Chapter
6 for additional rules.
(2) If owner also has a SEP-IRA (or only a SEP-IRA) this contribution can be
made instead to the SEP-IRA (in addition to the employer's contributions
under the SEP plan).
(3) Compensation does not include your employer's contribution to your
SEP-IRA and generally is limited to $150,000 in 1994. A special
computation is required to figure the self-employed participant's
contribution limit. See Chapter 8.
Chapter 8 SIMPLIFIED EMPLOYEE PENSION (SEP) Page 41
<PAGE>
APPENDICES
To help you complete your tax return, the following appendices include the
following chart, worksheets, sample forms, and tables:
- - APPENDIX A -- SUMMARY RECORD OF IRA(s) FOR 1994 and WORKSHEET FOR DETERMINING
REQUIRED ANNUAL DISTRIBUTIONS FROM YOUR IRA(s).
- - APPENDIX B -- contains worksheets that you use if you receive social security
benefits and are subject to the IRA deduction phaseout rules. A filled-in
example is included.
a) Worksheet 1, COMPUTATION OF MODIFIED AGI
b) Worksheet 2, COMPUTATION OF IRA DEDUCTION
c) Worksheet 3, COMPUTATION OF TAXABLE SOCIAL SECURITY BENEFITS
d) Example and completed worksheets
- - APPENDIX C -- Filled-in Form 5329, ADDITIONAL TAXES ATTRIBUTABLE TO QUALIFIED
RETIREMENT PLANS (INCLUDING IRAs), ANNUITIES, AND MODIFIED ENDOWMENT
CONTRACTS
- - APPENDIX D -- Filled-in Forms 8606, NONDEDUCTIBLE IRAs (CONTRIBUTIONS,
DISTRIBUTIONS, AND BASIS)
- - APPENDIX E -- LIFE EXPECTANCY TABLES and the TABLE FOR DETERMINING APPLICABLE
DIVISOR FOR MDIB (MINIMUM DISTRIBUTION INCIDENTAL BENEFIT). These tables are
included to assist you in computing your required minimum distribution amount
if you have not taken all your assets from all your IRA(s) before age 70 1/2.
Page 42
<PAGE>
APPENDIX A. SUMMARY RECORD OF IRA(S) FOR 1994 (You May Keep This for Your
Records)
Name ____________________________________
I was / / covered / / not covered by my employer's retirement plan during
the year.
I became age 59 1/2 on ________________________.
(month) (day) (year)
I became age 70 1/2 on ________________________.
(month) (day) (year)
CONTRIBUTIONS
-------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Fair Market value of
Check, if rollover IRA as of December 31,
Name of IRA Date Amount contributed for 1994 contribution 1994, from Form 5498
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.
- ---------------------------------------------------------------------------------------------------------------------
2.
- ---------------------------------------------------------------------------------------------------------------------
3.
- ---------------------------------------------------------------------------------------------------------------------
4.
- ---------------------------------------------------------------------------------------------------------------------
5.
- ---------------------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------------------
Total contributions deducted on tax return $
---------
Total contributions treated as nondeductible on Form 8606 $
---------
</TABLE>
DISTRIBUTIONS
- -------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Reason Taxable
(e.g., for retirement, amount Nontaxable
rollover, withdrawal Income reported on amount from
Amount of of excess earned on income tax Form 8606,
Name of IRA Date distribution contributions, etc.) IRA return line 10
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1.
- ---------------------------------------------------------------------------------------------------------------------------
2.
- ---------------------------------------------------------------------------------------------------------------------------
3.
- ---------------------------------------------------------------------------------------------------------------------------
4.
- ---------------------------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------------------------
Basis of all IRAs as of 12/31/94 (from Form 8606, line 11) $
---------
Basis of all IRAs for 1994 (from Form 8606, line 12) $
---------
</TABLE>
NOTE: You should keep copies of your income tax return, and Forms W-2, 8606, and
5498.
WORKSHEET
FOR
DETERMINING REQUIRED ANNUAL DISTRIBUTIONS FROM YOUR IRA(S)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
1. Age 70 1/2 71 1/2 72 1/2 73 1/2 74 1/2 75 1/2
- -------------------------------------------------------------------------------------------------------------------
2. Year age was reached
- -------------------------------------------------------------------------------------------------------------------
3. Value of IRA at the
close of business on
December 31 of the
year immediately prior
to the year on line 2(1)
- -------------------------------------------------------------------------------------------------------------------
4. Divisor from Life
Expectancy Table I or
Table II(2)
- -------------------------------------------------------------------------------------------------------------------
5. Required distribution
(divide line 3 by
line 4)(3)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If you have more than one IRA, you must figure the required distribution
separately for each IRA.
(2) Use the appropriate divisor for each year and for each IRA. You can either
(a) use the appropriate divisor from the table each year, or (b) use the
appropriate divisor from the table for your 70 1/2 year and reduce it by 1
(one) for each subsequent year. To find the appropriate divisor, use your
age (and that of your beneficiary, if applicable) as of your birthday(s) in
the year shown on line 2. If your beneficiary is someone other than your
spouse, see MINIMUM DISTRIBUTION INCIDENTAL BENEFIT REQUIREMENT in
Chapter 6.
(3) If you have more than one IRA, you must withdraw an amount equal to the
total of the required distributions figured for each IRA. You can, however,
withdraw the total from one IRA or from more than one IRA.
Page 43
<PAGE>
APPENDIX B. WORKSHEETS FOR SOCIAL SECURITY RECIPIENTS WHO CONTRIBUTE TO AN IRA
If you receive social security benefits, have taxable compensation,
contribute to your IRA, and are covered (or considered covered) by an
employer retirement plan, complete the following worksheets.(See WHO IS
COVERED BY AN EMPLOYER PLAN? in Chapter 4.)
Use Worksheet 1 to figure your modified adjusted gross income. This
amount is needed in the computation of your IRA deduction, if any, which is
figured using Worksheet 2.
The IRA deduction figured using Worksheet 2 is entered on your tax
return.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WORKSHEET 1
COMPUTATION OF MODIFIED AGI
(FOR USE ONLY BY TAXPAYERS WHO RECEIVE SOCIAL SECURITY BENEFITS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FILING STATUS -- Check only one box:
/ / A. Married filing a joint return
/ / B. Single, Head of Household, Qualifying Widow(er), or Married
filing separately and LIVED APART from your spouse during the
ENTIRE YEAR
/ / C. Married filing separately and LIVED WITH your spouse at ANY TIME
during the year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1) Adjusted gross income (AGI) from Form 1040 or Form 1040A (not
taking into account any social security benefits from Form
SSA-1099 or RRB-1099, any deduction for an IRA, or any exclusion
of interest from savings bonds to be reported on Form 8815).......
-------
-------
2) Enter the amount in Box 5 of all Forms SSA-1099 and Forms
RRB-1099..........................................................
-------
-------
3) Enter one half of line 2..........................................
-------
-------
4) Enter the amount of any foreign earned income exclusion, foreign
housing exclusion, U.S. possessions income exclusion, or exclusion
of income from Puerto Rico you claimed as a bona fide resident
of Puerto Rico.....................................................
-------
-------
5) Enter the amount of any tax-exempt interest reported on line
8b of Form 1040 or 1040A...........................................
-------
-------
6) Add lines 1, 3, 4, and 5...........................................
-------
-------
7) Enter the amount listed below for your filing status...............
-------
-------
- $32,000 if you checked box A above, or
- $25,000 if you checked box B above, or
- $-0- if you checked box C above.
8) Subtract line 7 from line 6. If zero or less, enter 0 on this
line...............................................................
-------
-------
Page 44
<PAGE>
APPENDIX B. (CONTINUED)
<S> <C> <C>
9) If line 8 is zero, STOP HERE. None of your social security benefits
are taxable. If line 8 is more than 0, enter the amount listed below
for your filing status.............................................
-------
-------
$12,000 if you checked box A above
$ 9,000 if you checked box B above
$-0- if you checked box C above
10) Subtract line 9 from line 8. If zero or less, enter -0-...........
-------
-------
11) Enter the smaller of line 8 or line 9..............................
-------
-------
12) Enter one half of line 11..........................................
-------
-------
13) Enter the smaller of line 3 or line 12............................
-------
-------
14) Multiply line 10 by .85. If line 10 is zero, enter -0-............
-------
-------
15) Add lines 13 and 14...............................................
-------
-------
16) Multiply line 2 by .85............................................
-------
-------
17) TAXABLE BENEFITS to be included in MODIFIED AGI for IRA deduction
purposes. Enter the smaller of line 15 or line 16.................
-------
-------
18) Enter the amount of any foreign earned income exclusion and
foreign housing exclusion or deduction that you claimed............
-------
-------
19) MODIFIED AGI for determining you reduced IRA Deduction--add lines
1, 17, and 18. Enter here and on line 2 of Worksheet 2, next.......
-------
-------
</TABLE>
Page 45
<PAGE>
APPENDIX B (CONTINUED)
WORKSHEET 2
COMPUTATION OF IRA DEDUCTION
(FOR USE ONLY BY TAXPAYERS WHO RECEIVE SOCIAL SECURITY BENEFITS)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
IF YOUR FILING AND YOUR MODIFIED AGI ENTER ON LINE 1
STATUS IS: IS OVER: BELOW:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Married-joint return,
or qualifying widow(er) $40,000* $50,000
Single, or Head
of household $25,000* $35,000
Married-separate return** $ -0-* $10,000
* If your modified AGI is NOT over this amount, you can take an IRA
deduction for your contributions of up to the lesser of $2,000 or your
taxable compensation. Skip this worksheet and proceed to Worksheet 3.
** If you did NOT live with your spouse AT ANY TIME during the year,
consider your filing status as single.
NOTE: If you were married and both you and your spouse worked and you both
contributed to IRAs, figure the deduction for each of you separately.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1. Enter the applicable amount from above...........................
--------
--------
2. Enter your MODIFIED AGI from Worksheet 1, line 19................
--------
--------
NOTE: If line 2 is equal to or more than the amount on line 1, STOP HERE;
your IRA contributions are NOT deductible. Proceed to Worksheet 3.
3. Subtract line 2 from line 1.....................................
--------
--------
4. Multiply line 3 by 20% (.20). If the result is not a multiple
of $10, round it to the next highest multiple of $10. (For
example, $611.40 is rounded to $620.) However, if the result
is less than $200, enter $200....................................
--------
--------
5. Enter your compensation. (Do not include your spouse's
compensation.)...................................................
--------
--------
6. Enter contributions you made, or plan to make, to your IRA for
1994, but do not enter more than $2,000..........................
--------
--------
7. IRA DEDUCTION. Compare lines 4, 5, and 6. Enter the smallest
amount here (or a smaller amount if you choose). Enter this
amount on the Form 1040 or 1040A line for your IRA. (If the
amount on line 6 is more than the amount on line 7, complete
line 8.)........................................................
--------
--------
8. NONDEDUCTIBLE CONTRIBUTIONS. Subtract line 7 from line 5 or 6,
whichever is smaller. Enter the result here and on line 1 of
your Form 8606, NONDEDUCTIBLE IRAS (CONTRIBUTIONS, DISTRIBUTIONS,
AND BASIS)......................................................
--------
--------
NOTE: If you qualify to contribute to a SPOUSAL IRA, continue with
line 9.
9. Compare the amount on line 5 to $2,250 and enter the smaller
amount..........................................................
--------
--------
10. Add lines 7 and 8...............................................
--------
--------
11. Subtract line 10 from line 9....................................
--------
--------
NOTE: If line 11 is zero or less, STOP HERE. You cannot make contributions
to an IRA for your spouse. If line 11 is more than zero, go to line 12.
<PAGE>
APPENDIX B (CONTINUED)
12. Enter the smallest of...........................................
--------
--------
A. IRA contributions you made, or plan to make, for 1994 to your
spouse's IRA;
B. The amount on line 11; or
C. $2,000.
13. Multiply line 3 by 22.5% (.225). If the result is not a
multiple of $10, round it up to the next multiple of $10. If
the result is less than $200, enter $200........................
--------
--------
14. Enter the amount from line 7....................................
--------
--------
15. Subtract 14 from line 13........................................
--------
--------
16. Compare the amounts on lines 12 and 15. Enter the
smaller amount..................................................
--------
--------
17. SPOUSAL IRA DEDUCTION. Compare the amounts on lines 4, 5,
and 16. Enter the smallest amount (or a smaller amount if you
choose) here and on Form 1040 or 1040A..........................
--------
--------
NOTE: If line 12 is more than line 17, Complete line 18.
18. MAXIMUM SPOUSAL IRA NONDEDUCTIBLE CONTRIBUTIONS. Subtract
line 17 from line 12. Enter the result here and on line 1 of
your spouse's Form 8606.........................................
--------
--------
Page 47
<PAGE>
APPENDIX B. (CONTINUED)
WORKSHEET 3
COMPUTATION OF TAXABLE SOCIAL SECURITY BENEFITS
(FOR USE BY TAXPAYERS WHO RECEIVE SOCIAL
SECURITY BENEFITS AND TAKE AN IRA DEDUCTION)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FILING STATUS--Check only one box:
/ / A. Married filing a joint return
/ / B. Single, Head of Household, Qualifying Widow(er), or Married
filing separately and LIVED APART from your spouse during the
ENTIRE YEAR
/ / C. Married filing separately and LIVED WITH your spouse at ANY TIME
during the year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1) Adjusted gross income (AGI) from Form 1040 or Form 1040A (NOT
TAKING INTO ACCOUNT any IRA deduction, any social security
benefits from Form SSA-1099 or RRB-1099, or any exclusion of
interest from savings bonds to be reported on Form 8815)..........
-------
-------
2) IRA deduction(s) from line 7, and, if applicable, line 17 of
Worksheet 2.......................................................
-------
-------
3) Subtract line 2 from line 1.......................................
-------
-------
4) Enter amount in Box 5 of all Forms SSA-1099 and Forms RRB-1099....
-------
-------
5) Enter one half of line 2..........................................
-------
-------
6) Enter the amount of any foreign earned income exclusion, foreign
housing exclusion, exclusion of income from U.S. possessions, or
exclusion of income from Puerto Rico you claimed as a bona fide
resident of Puerto Rico...........................................
-------
-------
7) Enter the amount of any tax-exempt interest reported on line 8b
of Form 1040 or 1040A.............................................
-------
-------
8) Add lines 3, 5, 6, and 7..........................................
-------
-------
9) Enter the amount listed below for your filing status..............
-------
-------
- $32,000 if you checked box A above, or
- $25,000 if you checked box B above, or
- $-0- if you checked box C above.
10) Subtract line 9 from line 8. If zero or less, enter 0 on this line..
-------
-------
</TABLE>
Page 48
<PAGE>
APPENDIX B. (CONTINUED)
<TABLE>
<S> <C> <C>
11) If line 10 is zero, STOP HERE. None of your social security
benefits are taxable. If line 10 is more than 0, enter the amount
listed below for your filing status...............................
-------
-------
$12,000 if you checked box A above
$ 9,000 if you checked box B above
$-0- if you checked C above
12) Subtract line 11 from line 10. If zero or less, enter -0-.........
-------
-------
13) Enter the smaller of line 10 or line 11...........................
-------
-------
14) Enter one half of line 13.........................................
-------
-------
15) Enter the smaller of line 5 or line 14............................
-------
-------
16) Multiply line 12 by .85. If line 12 is zero, enter -0-............
-------
-------
17) Add lines 15 and 16...............................................
-------
-------
18) Multiply line 4 by .85............................................
-------
-------
19) TAXABLE SOCIAL SECURITY BENEFITS. Enter the smaller of line 17
or line 18........................................................
-------
-------
</TABLE>
Page 49
<PAGE>
APPENDIX B. (CONTINUED)
COMPREHENSIVE EXAMPLE
DETERMINING YOUR IRA DEDUCTION AND THE TAXABLE PORTION OF YOUR
SOCIAL SECURITY BENEFITS
John Black is married and files a joint return. He had 1994 wages of
$42,500. His wife did not work in 1994. He also received social security
benefits of $7,000 and made a $2,000 contribution to his IRA and a $250
contribution to a spousal IRA for his wife for the year. He had no foreign
income, no tax-exempt interest, and no adjustments to income on lines 24
through 29 on his Form 1040. He participated in a section 401(k) retirement
plan at work.
John completes Worksheets 1 and 2. Worksheet 2 shows that his 1994 IRA
deduction is $460 and the spousal IRA deduction of $60. He must either
withdraw the excess amounts ($1,540 shown on line 8 and $190 shown on line 18
of Worksheet 2), or treat that excess amounts as nondeductible contributions
(in which case he must complete two Forms 8606 and attach them to his Form
1040).
The completed worksheets that follow show how John figured his modified
AGI to determine the IRA deductions and the taxable social security benefits
to report on his Form 1040.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WORKSHEET 1
COMPUTATION OF MODIFIED AGI
(FOR USE ONLY BY TAXPAYERS WHO RECEIVE SOCIAL SECURITY BENEFITS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FILING STATUS -- Check only one box:
/X/ A. Married filing a joint return
/ / B. Single, Head of Household, Qualifying Widow(er), or Married
filing separately and LIVED APART from your spouse during the
ENTIRE YEAR
/ / C. Married filing separately and LIVED WITH your spouse at ANY TIME
during the year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
1) Adjusted gross income (AGI) from Form 1040 or Form 1040A (not
taking into account any social security benefits from Form
SSA-1099 or RRB-1099, any deduction for an IRA, or any exclusion
of interest from savings bonds to be reported on Form 8815)....... $42,500
-------
-------
2) Enter the amount in Box 5 of all Forms SSA-1099 and Forms
RRB-1099.......................................................... 7,000
-------
-------
3) Enter one half of line 2.......................................... 3,500
-------
-------
4) Enter the amount of any foreign earned income exclusion, foreign
housing exclusion, U.S. possessions income exclusion, or exclusion
of income from Puerto Rico you claimed as a bona fide resident
of Puerto Rico..................................................... -0-
-------
-------
5) Enter the total amount of any tax-exempt interest reported on line
8b of Form 1040 or 1040A........................................... -0-
-------
-------
6) Add lines 1, 3, 4, and 5........................................... 46,000
-------
-------
7) Enter the amount listed below for your filing status............... 32,000
-------
-------
- $32,000 if you checked box A above, or
- $25,000 if you checked box B above, or
- -0- if you checked box C above.
8) Subtract line 7 from line 6. If zero or less, enter zero on this
line............................................................... 14,000
-------
-------
Page 50
<PAGE>
APPENDIX B (CONTINUED)
<S> <C>
9) If line 8 is zero, STOP HERE. None of your social security benefits
are taxable. If line 8 is more than 0, enter the amount listed
below for your filing status....................................... 12,000
-------
-------
$12,000 if you checked box A above
$9,000 if you checked box B above
$-0- if you checked box C above
10) Subtract line 9 from line 8. If zero or less, enter -0-............ 2,000
-------
-------
11) Enter the smaller of line 8 or line 9.............................. 12,000
-------
-------
12) Enter one half of line 11.......................................... 6,000
-------
-------
13) Enter the smaller of line 3 or line 12............................ 3,500
-------
-------
14) Multiply line 10 by .85. If line 10 is zero, enter -0-............ 1,700
-------
-------
15) Add lines 13 and 14............................................... 5,200
-------
-------
16) Multiply line 2 by .85............................................ 5,950
-------
-------
17) TAXABLE BENEFITS to be included in MODIFIED AGI for IRA deduction
purposes. Enter the smaller of line 15 or line 16................. 5,200
-------
-------
18) Enter the amount of any foreign earned income exclusion and
foreign housing exclusion or deduction that you claimed............ -0-
-------
-------
19) MODIFIED AGI for determining your reduced IRA Deduction--add lines
1, 17, and 18. Enter here and on line 2 of Worksheet 2, next....... 47,700
-------
-------
</TABLE>
Page 51
<PAGE>
APPENDIX B. (CONTINUED)
WORKSHEET 2
COMPUTATION OF IRA DEDUCTION
(FOR USE ONLY BY TAXPAYERS WHO RECEIVE SOCIAL SECURITY BENEFITS)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
IF YOUR FILING AND YOUR MODIFIED AGI ENTER ON LINE 1
STATUS IS: IS OVER: BELOW:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Married-joint return,
or qualifying widow(er) $40,000* $50,000
Single, or Head
of household $25,000* $35,000
Married-separate return** $ -0-* $10,000
* If your modified AGI is NOT over this amount, you can take an IRA
deduction for your contributions of up to the lesser of $2,000 or your
taxable compensation. Skip this worksheet and proceed to Worksheet 3.
** If you did NOT live with your spouse AT ANY TIME during the year,
consider your filing status as single.
NOTE: If you were married and both you and your spouse worked and you both
contributed to IRAs, figure the deduction for each of you separately.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1. Enter the applicable amount from above...........................$50,000
-------
-------
2. Enter your MODIFIED AGI from Worksheet 1, line 19................ 47,700
-------
-------
NOTE: If line 2 is equal to or more than the amount on line 1, STOP HERE;
your IRA contributions are NOT deductible.
Proceed to worksheet 3.
3. Subtract line 2 from line 1..................................... 2,300
-------
-------
4. Multiply line 3 by 20% (.20). If the result is not a multiple
of $10, round it to the next highest multiple of $10. (For
example, $611.40 is rounded to $620.) However, if the result
is less than $200, enter $200.................................... 460
-------
-------
5. Enter your compensation. (Do not include your spouse's
compensation.)................................................... 42,500
-------
-------
6. Enter contributions you made, or plan to make, to your IRA for
1994, but do not enter more than $2,000.......................... 2,000
-------
-------
7. IRA DEDUCTION. Compare lines 4, 5, and 6. Enter the smallest
amount here (or a smaller amount if you choose). Enter this
amount on the Form 1040 or 1040A line for your IRA. (If the
amount on line 6 is more than the amount on line 7, complete
line 8.)........................................................ 460
-------
-------
8. NONDEDUCTIBLE CONTRIBUTIONS. Subtract line 7 from line 5 or 6,
whichever is smaller. Enter the result here and on line 1 of
your Form 8606, NONDEDUCTIBLE IRAS (CONTRIBUTIONS, DISTRIBUTIONS,
AND BASIS)...................................................... 1,540
-------
-------
NOTE: If you qualify to contribute to a SPOUSAL IRA, continue with
line 9.
9. Compare the amount on line 5 to $2,250 and enter the smaller
amount.......................................................... 2,250
-------
-------
10. Add lines 7 and 8............................................... 2,000
-------
-------
11. Subtract line 10 from line 9.................................... 250
-------
-------
NOTE: If line 11 is zero or less, STOP HERE. You cannot make contributions
to an IRA for your spouse. If line 11 is more than zero, go to line 12.
Page 52
<PAGE>
APPENDIX B. (CONTINUED)
12. Enter the smallest of:.......................................... 250
-------
-------
A. IRA contributions you made, or plan to make, for 1994 to your
spouse's IRA;
B. The amount on line 11; or
C. $2,000.
13. Multiply line 3 by 22.5% (.225). If the result is not a
multiple of $10, round it up to the next multiple of $10. If
the result is less than $200, enter $200........................ 520
-------
-------
14. Enter the amount from line 7.................................... 460
-------
-------
15. Subtract line 14 from line 13................................... 60
-------
-------
16. Compare the amounts on lines 12 and 15. Enter the
smaller amount.................................................. 60
-------
-------
17. SPOUSAL IRA DEDUCTION. Compare the amounts on lines 4, 5,
and 16. Enter the smallest amount (or a smaller amount if you
choose) here and on Form 1040 or 1040A.......................... 60
-------
-------
NOTE: If line 12 is more than line 17, complete line 18.
18. MAXIMUM SPOUSAL IRA NONDEDUCTIBLE CONTRIBUTIONS. Subtract
line 17 from line 12. Enter the result here and on line 1 of
your spouse's Form 8606......................................... 190
-------
-------
Page 53
<PAGE>
APPENDIX B. (CONTINUED)
WORKSHEET 3
COMPUTATION OF TAXABLE SOCIAL SECURITY BENEFITS
(FOR USE BY TAXPAYERS WHO RECEIVE SOCIAL
SECURITY BENEFITS AND TAKE AN IRA DEDUCTION)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FILING STATUS--Check only one box:
/X/ A. Married filing a joint return
/ / B. Single, Head of Household, Qualifying Widow(er), or Married
filing separately and LIVED APART from your spouse during the
ENTIRE YEAR
/ / C. Married filing separately and LIVED WITH your spouse at ANY TIME
during the year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
1) Adjusted gross income (AGI) from Form 1040 or Form 1040A (NOT
TAKING INTO ACCOUNT any IRA deduction, any social security benefits
from Form SSA-1099 or RRB-1099, or any exclusion of interest from
savings bonds to be reported on Form 8815)........................ $42,500
-------
-------
2) IRA deduction(s) from line 7, and, if applicable, line 17 of
Worksheet 2....................................................... 520
-------
-------
3) Subtract line 2 from line 1....................................... 41,980
-------
-------
4) Enter amount in Box 5 of all Forms SSA-1099 and Forms RRB-1099.... 7,000
-------
-------
5) Enter one half of line 4.......................................... 3,500
-------
-------
6) Enter the amount of any foreign earned income exclusion, foreign
housing exclusion, exclusion of income from U.S. possessions, or
exclusion of income from Puerto Rico you claimed as a bona fide
resident of Puerto Rico........................................... -0-
-------
-------
7) Enter the amount of any tax-exempt interest reported on line 8b
of Form 1040 or 1040A............................................. -0-
-------
-------
8) Add lines 3, 5, 6, and 7.......................................... 45,480
-------
-------
9) Enter the amount listed below for your filing status.............. 32,000
-------
-------
- $32,000 if you checked box A above, or
- $25,000 if you checked box B above, or
- $-0- if you checked box C above.
10) Subtract line 9 from line 8. If zero or less, enter 0 on this line.. 13,480
-------
-------
</TABLE>
Page 54
<PAGE>
APPENDIX B. (CONTINUED)
<TABLE>
<S> <C>
11) If line 10 is zero, STOP HERE. None of your social security
benefits are taxable. If line 10 is more than 0, enter the amount
listed below for your filing status............................... 12,000
-------
-------
$12,000 if you checked box A above
$ 9,000 if you checked box B above
$-0- if you checked box C above
12) Subtract line 11 from line 10. If zero or less, enter -0-......... 1,480
-------
-------
13) Enter the smaller of line 10 or line 11........................... 12,000
-------
-------
14) Enter one half of line 13......................................... 6,000
-------
-------
15) Enter the smaller of line 5 or line 14............................ 3,500
-------
-------
16) Multiply line 12 by .85. If line 12 is zero, enter -0-............ 1,258
-------
-------
17) Add lines 15 and 16............................................... 4,758
-------
-------
18) Multiply line 4 by .85............................................ 5,950
-------
-------
19) TAXABLE SOCIAL SECURITY BENEFITS. Enter the smaller of line 17
or line 18........................................................ 4,758
-------
-------
</TABLE>
Page 55
<PAGE>
APPENDIX C. FILLED-IN FORM 5329
FORM 5329 OMB NO. 1545-0203
1994
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 29
ADDITIONAL TAXES ATTRIBUTABLE TO QUALIFIED
RETIREMENT PLANS (INCLUDING IRAs), ANNUITIES,
AND MODIFIED ENDOWMENT CONTRACTS
(UNDER SECTIONS 72, 4973, 4974 AND 4980A OF THE INTERNAL REVENUE CODE)
ATTACH TO FORM 1040. SEE SEPARATE INSTRUCTIONS.
Name of individual subject to additional tax (if married filing jointly, see
instructions)
/s/ Paul Jones
Your social security number
003:00:0000
FILL IN YOUR ADDRESS ONLY IF YOU ARE FILING THIS FORM BY ITSELF AND NOT WITH
YOUR TAX RETURN
Home address (number and street), or P O box if mail is not delivered to your
home
Apt. no
City, town or post office, state, and ZIP code
If this is an amended return, check here / /
If you are subject to the 10% tax on early distributions ONLY, see
WHO MUST FILE in the instructions before continuing. You may be
able to report this tax directly on Form 1040 without filing Form
5329.
PART I TAX ON EARLY DISTRIBUTIONS
COMPLETE THIS PART IF A TAXABLE DISTRIBUTION WAS MADE FROM YOUR QUALIFIED
RETIREMENT PLAN (INCLUDING AN IRA), ANNUITY CONTRACT, OR MODIFIED ENDOWMENT
CONTRACT BEFORE YOU REACHED AGE 59 1/2 (OR WAS INCORRECTLY INDICATED AS SUCH
ON YOUR FORM 1099-R--SEE INSTRUCTIONS). NOTE: YOU MUST INCLUDE THE AMOUNT OF
THE DISTRIBUTION ON LINE 15B OR 16B OF FORM 1040 OR ON THE APPROPRIATE LINE
OF FORM 4972.
1 Early distributions included in gross income
(see instructions)............................................ 1 3,000.00
2 Distributions excepted from additional tax (see
instructions). Enter appropriate exception number from
instructions__............................................... 2 -0-
3 Amount subject to additional tax. Subtract line 2 from line 1 3 3,000.00
4 TAX DUE. Multiply line 3 by 10% (.10). Enter here and on
Form 1040, line 51........................................... 4 300.00
PART II TAX ON EXCESS CONTRIBUTIONS TO INDIVIDUAL RETIREMENT
ARRANGEMENTS
COMPLETE THIS PART IF, EITHER IN THIS YEAR OR IN EARLIER YEARS, YOU
CONTRIBUTED MORE TO YOUR IRA THAN IS OR WAS ALLOWABLE AND YOU HAVE AN EXCESS
CONTRIBUTION SUBJECT TO TAX.
5 Excess contributions for 1994 (see instructions). Do not
include this amount on Form 1040, line 23a or 23b....... 5 500.00
6 Earlier year excess contributions not previously
eliminated (see instructions).................... 6
7 Contribution credit. If your actual contribution
for 1994 is less than your maximum allowable
contribution, see instructions; otherwise
enter -0-........................................ 7
8 1994 distributions from your IRA account that are
includible in taxable income..................... 8
9 1993 tax year excess contributions (if any)
withdrawn after the due date (including extensions)
of your 1993 income tax return, and 1992 and
earlier tax year excess contributions withdrawn in
1994............................................. 9
10 Add lines 7, 8 and 9............................ 10
11 Adjusted earlier year excess contributions. Subtract line
10 from from line 6. Enter the result, but not less than
zero....................................................... 11
12 Total excess contributions. Add lines 5 and 11............. 12 500.00
13 TAX DUE. Enter the SMALLER of 6% (.06) of line 12 or 6%
(.06%) of the value of your IRA on the last day of 1994.
Also enter this amount on Form 1040, line 51............... 13 30.00
FOR PAPERWORK REDUCTION ACT NOTICE, SEE PAGE 1 OF SEPARATE INSTRUCTIONS.
Cat. No 133290 Form 5329 (1994)
PAGE 56
<PAGE>
APPENDIX C. (CONTINUED)
Form 5329 (1994) Page 2
PART III TAX ON EXCESS ACCUMULATION IN QUALIFIED RETIREMENT PLANS
(INCLUDING IRAs)
14 Minimum required distribution (see instructions)........... 14
15 Amount actually distributed to you......................... 15
16 Subtract line 15 from line 14. If line 15 is more than line
14, enter -0-.............................................. 16
17 TAX DUE. Multiply line 16 by 50% (.50). Enter here and on
Form 1040, line 51......................................... 17
PART IV TAX ON EXCESS DISTRIBUTIONS FROM QUALIFIED RETIREMENT
PLANS (INCLUDING IRAs)
COMPLETE COLUMN A FOR REGULAR DISTRIBUTIONS. COMPLETE COLUMN A COLUMN B
COLUMN B FOR LUMP-SUM DISTRIBUTIONS. REGULAR LUMP-SUM
DISTRIBU- DISTRIBU-
TIONS TIONS
18 Total amount of regular retirement or
lump-sum distributions....................... 18
19 Amount excluded from additional tax. Enter
appropriate exception number from
instructions__............................... 19
20 Subtract line 19 from line 18................ 20
21 Enter the GREATER of the threshold amount or
the 1994 recovery of the grandfather amount
(from Worksheet 1 or 2). See instructions.... 21
22 Excess distributions. Subtract line 21 from
line 20. If less than zero, enter -0-........ 22
23 Tentative tax. Multiply line 22 by 15% (.15). 23
24 Early distributions tax offset (see
(instructions)............................... 24
25 Subtract line 24 from line 23................ 25
26 TAX DUE. Combine columns (a) and (b) of line 25.
Enter here and on Form 1040, line 51....................... 26
ACCELERATION ELECTIONS (SEE THE INSTRUCTIONS FOR PART IV)
1 If you elected the discretionary method in 1987 or 1988 and wish to make an
acceleration election beginning in 1994 under Temporary Regulations section
54.4981A-1T, Q&A b-12, check here / /.
2 If you previously made an acceleration election and wish to revoke that
election, check here / /.
SIGNATURE. COMPLETE ONLY IF YOU ARE FILING THIS FORM BY ITSELF AND NOT WITH
YOUR TAX RETURN.
PLEASE Under penalties of perjury, I declare that I have examined this form,
SIGN including accompanying schedules and statements, and to the best of my
HERE knowledge and belief, it is true, correct and complete. Declaration of
preparer (other than taxpayer) is based on all information of which
preparer has any knowledge.
Your signature Date
PAID Preparer's Date Check if self- Preparer's
PREPARER'S signature employed / / social security no.
USE ONLY
Firm's name (or yours, E.f. No.
if self employed) and ZIP code
address.
[LOGO] PRINTED ON RECYCLED PAPER
Page 57
<PAGE>
APPENDIX D. FILLED-IN FORM 8606
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C>
Form 8606 NONDEDUCTIBLE IRAS OMB No. 1545-1007
(CONTRIBUTIONS, DISTRIBUTIONS AND BASIS) 1994
Department of the Treasury - Please see What Records Must I Keep? on page 2. Attachment
Internal Revenue Service - Attach to Form 1040, Form 1040A, or Form 1040NR. Sequence No. 47
Name. If married, file a separate Form 8606 for each spouse. See instructions. Your social security number
/s/ Bill King 002 00 0000
______________________________________________________________________________ ___________________
FILL IN YOUR ADDRESS ONLY Home address (number and street, or P.O. box if mail is not delivered to your home) Apt. no.
IF YOU ARE FILING THIS __________________________________________________________________________________ ________
FORM BY ITSELF AND NOT City, town or post office, state, and ZIP code
WITH YOUR TAX RETURN __________________________________________________________________________________________________
CONTRIBUTIONS, NONTAXABLE DISTRIBUTIONS, AND BASIS
1 Enter your IRA contributions for 1994 that you choose to be nondeductible. Include
those made during 1/1/95-4/17/95 that were for 1994. See instructions. . . . . . . . . 1 0.00
2 Enter your total IRA basis for 1993 and earlier years. See instructions. . . . . . . . 2 2,000.00
3 Add lines 1 and 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2,000.00
DID YOU RECEIVE NO ENTER THE AMOUNT FROM LINE 3 ON
ANY IRA LINE 12. THEN, STOP AND READ WHEN
DISTRIBUTIONS AND WHERE TO FILE ON PAGE 2.
(WITHDRAWALS)
IN 1994? YES GO TO LINE 4.
4 Enter only those contributions included on line 1 that were made during 1/1/95-4/17/95.
This amount will be the same as line 1 if all of your nondeductible contributions for
1994 were made in 1995 by 4/17/95. See instructions. . . . . . . . . . . . . . . . . . 4 0.00
5 Subtract line 4 from line 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2,000.00
6 Enter the total value of ALL your IRAs as of 12/31/94 plus any
outstanding rollovers. See instructions. . . . . . . . . . . . . . 6 1,800.00
7 Enter the total IRA distributions received during 1994. Do not
include amounts rolled over before 1/1/95. See instructions. . . . 7 600.00
8 Add lines 6 and 7. . . . . . . . . 8 2,400.00
9 Divide line 5 by line 8 and enter the result as a decimal (to at
least two places). Do not enter more than "1.00" . . . . . . . . . 9 0.8333
10 Multiply line 7 by line 9. This is the amount of your NONTAXABLE DISTRIBUTIONS FOR
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 500.00
11 Subtract line 10 from line 5. This is the BASIS IN YOUR IRA(S) as of 12/31/94. . . . 11 1,500.00
12 Add lines 4 and 11. This is your TOTAL IRA BASIS FOR 1994 AND EARLIER YEARS. . . . . 12 1,500.00
TAXABLE DISTRIBUTIONS FOR 1994
13 Subtract line 10 from line 7. Enter the result here and on Form 1040, line 15b;
Form 1040A, line 10b; or Form 1040NR, line 16b, whichever applies . . . . . . . . . 13 100.00
SIGN HERE ONLY IF YOU Under penalties of perjury, I declare that I have examined this form, including
ARE FILING THIS FORM accompanying attachments, and to the best of my knowledge and belief, it is true,
BY ITSELF AND NOT WITH correct, and complete.
YOUR TAX RETURN -- _________________________________________ -- _________________________
Your signature Date
</TABLE>
Page 58
<PAGE>
APPENDIX D. (CONTINUED)
IN THIS ILLUSTRATION, WE HAVE USED THE 1994 FORM BECAUSE THE 1995 FORM WILL NOT
BE AVAILABLE UNTIL 1995.
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C>
Form 8606 NONDEDUCTIBLE IRAS OMB No. 1545-1007
(CONTRIBUTIONS, DISTRIBUTIONS AND BASIS) 1994
Department of the Treasury - Please see What Records Must I Keep? on page 2. Attachment
Internal Revenue Service - Attach to Form 1040, Form 1040A, or Form 1040NR. Sequence No. 47
Name. If married, file a separate Form 8606 for each spouse. See instructions. Your social security number
/s/ Bill King 002 00 0000
______________________________________________________________________________ ________________
FILL IN YOUR ADDRESS ONLY Home address (number and street, or P.O. box if mail is not delivered to your home) Apt. no.
IF YOU ARE FILING THIS ___________________________________________________________________________________ ________
FORM BY ITSELF AND NOT City, town or post office, state and ZIP code
WITH YOUR TAX RETURN __________________________________________________________________________________________________
CONTRIBUTIONS, NONTAXABLE DISTRIBUTIONS, AND BASIS
1 Enter your IRA contributions for 1994 that you choose to be nondeductible. Include
those made during 1/1/95-4/17/95 that were for 1994. See instructions. . . . . . . . . 1 0.00
2 Enter your total IRA basis for 1993 and earlier years. See instructions. . . . . . . . 2 1,500.00
3 Add lines 1 and 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1,500.00
DID YOU RECEIVE NO ENTER THE AMOUNT FROM LINE 3 ON
ANY IRA LINE 12. THEN, STOP AND READ WHEN
DISTRIBUTIONS AND WHERE TO FILE ON PAGE 2.
(WITHDRAWALS)
IN 1994? YES GO TO LINE 4.
4 Enter only those contributions included on line 1 that were made during 1/1/95-4/17/95.
This amount will be the same as line 1 if all of your nondeductible contributions for
1994 were made in 1995 by 4/17/95. See instructions. . . . . . . . . . . . . . . . . . 4 0.00
5 Subtract line 4 from line 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1,500.00
6 Enter the total value of ALL your IRAs as of 12/31/94 plus any
outstanding rollovers. See instructions. . . . . . . . . . . . . . 6 0.00
7 Enter the total IRA distributions received during 1994. Do not
include amounts rolled over before 1/1/95. See instructions. . . . 7 1,300.00
8 Add lines 6 and 7. . . . . . . . . . . . . . . . . . 8 1,300.00
9 Divide line 5 by line 8 and enter the result as a decimal (to at
least two places). Do not enter more than "1.00" . . . . . . . . . 9 1.00
10 Multiply line 7 by line 9. This is the amount of your NONTAXABLE DISTRIBUTIONS FOR
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1,300.00
11 Subtract line 10 from line 5. This is the BASIS IN YOUR IRA(S) as of 12/31/94. . . . 11 200.00
12 Add lines 4 and 11. This is your TOTAL IRA BASIS FOR 1994 AND EARLIER YEARS. . . . . 12 200.00
TAXABLE DISTRIBUTIONS FOR 1994
13 Subtract line 10 from line 7. Enter the result here and on Form 1040, line 15b;
Form 1040A, line 10b; or Form 1040NR, line 16b, whichever applies . . . . . . . . . 13 0.00
SIGN HERE ONLY IF YOU Under penalties of perjury, I declare that I have examined this form, including
ARE FILING THIS FORM accompanying attachments, and to the best of my knowledge and belief, it is true,
BY ITSELF AND NOT WITH correct, and complete.
YOUR TAX RETURN -- _________________________________________ -- _________________________
Your signature Date
</TABLE>
Page 59
<PAGE>
APPENDIX E. TABLE FOR DETERMINING APPLICABLE DIVISOR FOR MDIB*
(MINIMUM DISTRIBUTION INCIDENTAL BENEFiT)
- -------------------------------------------------------------------------------
APPLICABLE APPLICABLE
AGE DIVISOR AGE DIVISOR
- -------------------------------------------------------------------------------
70 26.2 93 8.8
71 25.3 94 8.3
72 24.4 95 7.8
73 23.5 96 7.3
74 22.7 97 6.9
75 21.8 98 6.5
76 20.9 99 6.1
77 20.1 100 5.7
78 19.2 101 5.3
79 18.4 102 5.0
80 17.6 103 4.7
81 16.8 104 4.4
82 16.0 105 4.1
83 15.3 106 3.8
84 14.5 107 3.6
85 13.8 108 3.3
86 13.1 109 3.1
87 12.4 110 2.8
88 11.8 111 2.6
89 11.1 112 2.4
90 10.5 113 2.2
91 9.9 114 2.0
92 9.4 115 and older 1.8
- -------------------------------------------------------------------------------
* Use this table if your beneficiary is someone other than your spouse. For
additional instructions, see MINIMUM DISTRIBUTION INCIDENTAL BENEFIT
REQUIREMENT in Chapter 6.
Page 60
<PAGE>
APPENDIX E. LIFE EXPECTANCY TABLES
- -------------------------------------------------------------------------------
TABLE I
(SINGLE LIFE EXPECTANCY)*
- -------------------------------------------------------------------------------
AGE DIVISOR AGE DIVISOR
- -------------------------------------------------------------------------------
35 47.3 73 13.9
36 46.4 74 13.2
37 45.4 75 12.5
38 44.4 76 11.9
39 43.5 77 11.2
40 42.5 78 10.6
41 41.5 79 10.0
42 40.6 80 9.5
43 39.6 81 8.9
44 38.7 82 8.4
45 37.7 83 7.9
46 36.8 84 7.4
47 35.9 85 6.9
48 34.9 86 6.5
49 34.0 87 6.1
50 33.1 88 5.7
51 32.2 89 5.3
52 31.3 90 5.0
53 30.4 91 4.7
54 29.5 92 4.4
55 28.6 93 4.1
56 27.7 94 3.9
57 26.8 95 3.7
58 25.9 96 3.4
59 25.0 97 3.2
60 24.2 98 3.0
61 23.3 99 2.8
62 22.5 100 2.7
63 21.6 101 2.5
64 20.8 102 2.3
65 20.0 103 2.1
66 19.2 104 1.9
67 18.4 105 1.8
68 17.6 106 1.6
69 16.8 107 1.4
70 16.0 108 1.3
71 15.3 109 1.1
72 14.6 110 1.0
- -------------------------------------------------------------------------------
* Table I does not provide for IRA owners younger than 35 years of age. For
additional life expectancy tables, see Publication 939.
Page 61
<PAGE>
APPENDIX E. (CONTINUED)
TABLE II
(JOINT LIFE AND LAST SURVIVOR EXPECTANCY)*
- ------------------------------------------------------------------------------
AGES 35 36 37 38 39 40 41 42 43 44
- ------------------------------------------------------------------------------
35 54.0 53.5 53.0 52.6 52.2 51.8 51.4 51.1 50.8 50.5
36 53.5 53.0 52.5 52.0 51.6 51.2 50.8 50.4 50.1 49.8
37 53.0 52.5 52.0 51.5 51.0 50.6 50.2 49.8 49.5 49.1
38 52.6 52.0 51.5 51.0 50.5 50.0 49.6 49.2 48.8 48.5
39 52.2 51.6 51.0 50.5 50.0 49.5 49.1 48.6 48.2 47.8
40 51.8 51.2 50.6 50.0 49.5 49.0 48.5 48.1 47.6 47.2
41 51.4 50.8 50.2 49.6 49.1 48.5 48.0 47.5 47.1 46.7
42 51.1 50.4 49.8 49.2 48.6 48.1 47.5 47.0 46.6 46.1
43 50.8 50.1 49.5 48.8 48.2 47.6 47.1 46.6 46.0 45.6
44 50.5 49.6 49.1 48.5 47.8 47.2 46.7 46.1 45.6 45.1
45 50.2 49.5 48.8 48.1 47.5 46.9 46.3 45.7 45.1 44.6
46 50.0 49.2 48.5 47.8 47.2 46.5 45.9 45.3 44.7 44.1
47 49.7 49.0 48.3 47.5 46.8 46.2 45.5 44.9 44.3 43.7
48 49.5 48.8 48.0 47.3 46.6 45.9 45.2 44.5 43.9 43.3
49 49.3 48.5 47.8 47.0 46.3 45.6 44.9 44.2 43.6 42.9
50 49.2 48.4 47.6 46.8 46.0 45.3 44.6 43.9 43.2 42.6
51 49.0 48.2 47.4 46.6 45.8 45.1 44.3 43.6 42.9 42.2
52 48.8 48.0 47.2 46.4 45.6 44.8 44.1 43.3 42.6 41.9
53 48.7 47.9 47.0 46.2 45.4 44.6 43.9 43.1 42.4 41.7
54 48.6 47.7 46.9 46.0 45.2 44.4 43.6 42.9 42.1 41.4
55 48.5 47.6 46.7 45.9 45.1 44.2 43.4 42.7 41.9 41.2
56 48.3 47.5 46.6 45.8 44.9 44.1 43.3 42.5 41.7 40.9
57 48.3 47.4 46.5 45.6 44.8 43.9 43.1 42.3 41.5 40.7
58 48.2 47.3 46.4 45.5 44.7 43.8 43.0 42.1 41.3 40.5
59 48.1 47.2 46.3 45.4 44.5 43.7 42.8 42.0 41.2 40.4
60 48.0 47.1 46.2 45.3 44.4 43.6 42.7 41.9 41.0 40.2
61 47.9 47.0 46.1 45.2 44.3 43.5 42.6 41.7 40.9 40.0
62 47.9 47.0 46.0 45.1 44.2 43.4 42.5 41.6 40.8 39.9
63 47.8 46.9 46.0 45.1 44.2 43.3 42.4 41.5 40.6 39.8
64 47.8 46.8 45.9 45.0 44.1 43.2 42.3 41.4 40.5 39.7
65 47.7 46.8 45.9 44.9 44.0 43.1 42.2 41.3 40.4 39.6
66 47.7 46.7 45.8 44.9 44.0 43.1 42.2 41.3 40.4 39.5
67 47.6 46.7 45.8 44.8 43.9 43.0 42.1 41.2 40.3 39.4
68 47.6 46.7 45.7 44.8 43.9 42.9 42.0 41.1 40.2 39.3
69 47.6 46.6 45.7 44.8 43.8 42.9 42.0 41.1 40.2 39.3
70 47.5 46.6 45.7 44.7 43.8 42.9 41.9 41.0 40.1 39.2
71 47.5 46.6 45.6 44.7 43.8 42.8 41.9 41.0 40.1 39.1
72 47.5 46.6 45.6 44.7 43.7 42.8 41.9 40.9 40.0 39.1
73 47.5 46.5 45.6 44.6 43.7 42.8 41.8 40.9 40.0 39.0
74 47.5 46.5 45.6 44.6 43.7 42.7 41.8 40.9 39.9 39.0
75 47.4 46.5 45.5 44.6 43.6 42.7 41.8 40.8 39.9 39.0
76 47.4 46.5 45.5 44.6 43.6 42.7 41.7 40.8 39.9 38.9
77 47.4 46.5 45.5 44.6 43.6 42.7 41.7 40.8 39.8 38.9
78 47.4 46.4 45.5 44.5 43.6 42.6 41.7 40.7 39.8 38.9
79 47.4 46.4 45.5 44.5 43.6 42.6 41.7 40.7 39.8 38.9
80 47.4 46.4 45.5 44.5 43.6 42.6 41.7 40.7 39.8 38.8
81 47.4 46.4 45.5 44.5 43.5 42.6 41.6 40.7 39.8 38.8
82 47.4 46.4 45.4 44.5 43.5 42.6 41.6 40.7 39.7 38.8
83 47.4 46.4 45.4 44.5 43.5 42.6 41.6 40.7 39.7 38.8
84 47.4 46.4 45.4 44.5 43.5 42.6 41.6 40.7 39.7 38.8
85 47.4 46.4 45.4 44.5 43.5 42.6 41.6 40.7 39.7 38.8
86 47.3 46.4 45.4 44.5 43.5 42.5 41.6 40.6 39.7 38.8
87 47.3 46.4 45.4 44.5 43.5 42.5 41.6 40.6 39.7 38.7
88 47.3 46.4 45.4 44.5 43.5 42.5 41.6 40.6 39.7 38.7
89 47.3 46.4 45.4 44.4 43.5 42.5 41.6 40.6 39.7 38.7
90 47.3 46.4 45.4 44.4 43.5 42.5 41.6 40.6 39.7 38.7
91 47.3 46.4 45.4 44.4 43.5 42.5 41.6 40.6 39.7 38.7
92 47.3 46.4 45.4 44.4 43.5 42.5 41.6 40.6 39.7 38.7
* Table II does not provide for IRA owners or survivors younger than 35 years
of age. For additional life expectancy tables, see IRS Publication 939.
Page 62
<PAGE>
APPENDIX E. (CONTINUED)
TABLE II (CONTINUED)
(JOINT LIFE AND LAST SURVIVOR EXPECTANCY)
- -------------------------------------------------------------------------------
AGES 45 46 47 48 49 50 51 52 53 54
- -------------------------------------------------------------------------------
45 44.1 43.6 43.2 42.7 42.3 42.0 41.6 41.3 41.0 40.7
46 43.6 43.1 42.6 42.2 41.8 41.4 41.0 40.6 40.3 40.0
47 43.2 42.6 42.1 41.7 41.2 40.8 40.4 40.0 39.7 39.3
48 42.7 42.2 41.7 41.2 40.7 40.2 39.8 39.4 39.0 38.7
49 42.3 41.8 41.2 40.7 40.2 39.7 39.3 38.8 38.4 38.1
50 42.0 41.4 40.8 40.2 39.7 39.2 38.7 38.3 37.9 37.5
51 41.6 41.0 40.4 39.8 39.3 38.7 38.2 37.8 37.3 36.9
52 41.3 40.6 40.0 39.4 38.8 38.3 37.8 37.3 36.8 36.4
53 41.0 40.3 39.7 39.0 38.4 37.9 37.3 36.8 36.3 35.8
54 40.7 40.0 39.3 38.7 38.1 37.5 36.9 36.4 35.8 35.3
55 40.4 39.7 39.0 38.4 37.7 37.1 36.5 35.9 35.4 34.9
56 40.2 39.5 38.7 38.1 37.4 36.8 36.1 35.6 35.0 34.4
57 40.0 39.2 38.5 37.8 37.1 36.4 35.8 35.2 34.6 34.0
58 39.7 39.0 38.2 37.5 36.8 36.1 35.5 34.8 34.2 33.6
59 39.6 38.8 38.0 37.3 36.6 35.9 35.2 34.5 33.9 33.3
60 39.4 38.6 37.8 37.1 36.3 35.6 34.9 34.2 33.6 32.9
61 39.2 38.4 37.6 36.9 36.1 35.4 34.6 33.9 33.3 32.6
62 39.1 38.3 37.5 36.7 35.9 35.1 34.4 33.7 33.0 32.3
63 38.9 38.1 37.3 36.5 35.7 34.9 34.2 33.5 32.7 32.0
64 38.8 38.0 37.2 36.3 35.5 34.8 34.0 33.2 32.5 31.8
65 38.7 37.9 37.0 36.2 35.4 34.6 33.8 33.0 32.3 31.6
66 38.6 37.8 36.9 36.1 35.2 34.4 33.6 32.9 32.1 31.4
67 38.5 37.7 36.8 36.0 35.1 34.3 33.5 32.7 31.8 31.2
68 38.4 37.6 36.7 35.8 35.0 34.2 33.4 32.5 31.8 31.0
69 38.4 37.5 36.6 35.7 34.9 34.1 33.2 32.4 31.6 30.8
70 38.3 37.4 36.5 35.7 34.8 34.0 33.1 32.3 31.5 30.7
71 38.2 37.3 36.5 35.6 34.7 33.9 33.0 32.2 31.4 30.5
72 38.2 37.3 36.4 35.5 34.6 33.8 32.9 32.1 31.2 30.4
73 38.1 37.2 36.3 35.4 34.6 33.7 32.8 32.0 31.1 30.2
74 38.1 37.2 36.3 35.4 34.5 33.6 32.8 31.9 31.1 30.2
75 38.1 37.1 36.2 35.3 34.5 33.6 32.7 31.8 31.0 30.1
76 38.0 37.1 36.2 35.3 34.4 33.5 32.6 31.8 30.9 30.1
77 38.0 37.1 36.2 35.3 34.4 33.5 32.6 31.7 30.8 30.0
78 38.0 37.0 36.1 35.2 34.3 33.4 32.5 31.7 30.8 29.9
79 37.9 37.0 36.1 35.2 34.3 33.4 32.5 31.6 30.7 29.9
80 37.9 37.0 36.1 35.2 34.2 33.4 32.5 31.6 30.7 29.8
81 37.9 37.0 36.0 35.1 34.2 33.3 32.4 31.5 30.7 29.8
82 37.9 36.9 36.0 35.1 34.2 33.3 32.4 31.5 30.6 29.7
83 37.9 36.9 36.0 35.1 34.2 33.3 32.4 31.5 30.6 29.7
84 37.8 36.9 36.0 35.1 34.2 33.2 32.3 31.4 30.6 29.7
85 37.8 36.9 36.0 35.1 34.1 33.2 32.3 31.4 30.5 29.6
86 37.8 36.9 36.0 35.0 34.1 33.2 32.3 31.4 30.5 29.6
87 37.8 36.9 35.9 35.0 34.1 33.2 32.3 31.4 30.5 29.6
88 37.8 36.9 35.9 35.0 34.1 33.2 32.3 31.4 30.5 29.6
89 37.8 36.9 35.9 35.0 34.1 33.2 32.3 31.4 30.5 29.6
90 37.8 36.9 35.9 35.0 34.1 33.2 32.3 31.3 30.5 29.6
91 37.8 36.8 35.9 35.0 34.1 33.2 32.2 31.3 30.4 29.5
92 37.8 36.8 35.9 35.0 34.1 33.2 32.2 31.3 30.4 29.5
Page 63
<PAGE>
APPENDIX E. LIFE EXPECTANCY TABLES (CONTINUED)
TABLE II (CONTINUED)
(JOINT LIFE AND LAST SURVIVOR EXPECTANCY)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
AGES 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 34.4 33.9 33.5 33.1 32.7 32.3 32.0 31.7 31.4 31.1
56 33.9 33.4 33.0 32.5 32.1 31.7 31.4 31.0 30.7 30.4
57 33.5 33.0 32.5 32.0 31.6 31.2 30.8 30.4 30.1 29.6
58 33.1 32.5 32.0 31.5 31.1 30.6 30.2 29.8 29.5 29.2
59 32.7 32.1 31.6 31.1 30.6 30.1 29.7 29.3 28.9 28.6
60 32.3 31.7 31.2 30.6 30.1 29.7 29.2 28.6 28.4 28.0
61 32.0 31.4 30.8 30.2 29.7 29.2 28.7 28.2 27.8 27.4
62 31.7 31.0 30.4 29.9 29.3 28.6 28.3 27.8 27.3 26.9
63 31.4 30.7 30.1 29.5 28.9 28.4 27.8 27.3 26.9 26.4
64 31.1 30.4 29.8 29.2 28.6 28.0 27.4 26.9 26.4 25.9
65 30.9 30.2 29.5 28.9 28.2 27.6 27.1 26.5 26.0 25.5 25.0 24.6 24.2 23.8 23.4 23.1 22.8 22.5 22.2 22.0
66 30.6 29.9 29.2 28.6 27.9 27.3 26.7 26.1 25.6 25.1 24.6 24.1 23.7 23.3 22.9 22.5 22.2 21.9 21.6 21.4
67 30.4 29.7 29.0 28.3 27.6 27.0 26.4 25.8 25.2 24.7 24.2 23.7 23.2 22.8 22.4 22.0 21.7 21.3 21.0 20.8
68 30.2 29.5 28.8 28.1 27.4 26.7 26.1 25.5 24.9 24.3 23.8 23.3 22.8 22.3 21.9 21.5 21.2 20.8 20.5 20.2
69 30.1 29.3 28.6 27.8 27.1 26.5 25.8 25.2 24.6 24.0 23.4 22.9 22.4 21.9 21.5 21.1 20.7 20.3 20.0 19.6
70 29.9 29.1 28.4 27.6 26.9 26.2 25.6 24.9 24.3 23.7 23.1 22.5 22.0 21.5 21.1 20.8 20.2 19.8 19.4 19.1
71 29.7 29.0 28.2 27.5 26.7 26.0 25.3 24.7 24.0 23.4 22.8 22.2 21.7 21.2 20.7 20.2 19.8 19.4 19.0 18.6
72 29.6 28.8 28.1 27.3 26.5 25.8 25.1 24.4 23.8 23.1 22.5 21.9 21.3 20.8 20.3 19.8 19.4 18.9 18.5 18.2
73 29.5 28.7 27.9 27.1 26.4 25.6 24.9 24.2 23.5 22.9 22.2 21.8 21.0 20.5 20.0 19.4 19.0 18.5 18.1 17.7
74 29.4 28.6 27.8 27.0 26.2 25.5 24.7 24.0 23.3 22.7 22.0 21.4 20.8 20.2 19.6 19.1 18.6 18.2 17.7 17.3
75 29.3 28.5 27.7 26.9 26.1 25.3 24.6 23.8 23.1 22.4 21.8 21.1 20.5 19.9 19.3 18.8 18.3 17.9 17.3 16.9
76 29.2 28.4 27.6 26.8 26.0 25.2 24.4 23.7 23.0 22.3 21.6 20.9 20.3 19.7 19.1 18.5 18.0 17.5 17.0 16.5
77 29.1 28.3 27.5 26.7 25.9 25.1 24.3 23.6 22.8 22.1 21.4 20.7 20.1 19.4 18.8 18.3 17.7 17.2 16.7 16.2
78 29.1 28.2 27.4 26.6 25.8 25.0 24.2 23.4 22.7 21.9 21.2 20.5 19.9 19.2 18.8 18.0 17.5 16.9 16.4 15.9
79 29.0 28.2 27.3 26.5 25.7 24.8 24.1 23.3 22.6 21.8 21.1 20.4 19.7 19.0 18.4 17.8 17.2 16.7 16.1 15.6
80 29.0 28.1 27.3 26.4 25.6 24.8 24.0 23.2 22.4 21.7 21.0 20.2 19.5 18.9 18.2 17.6 17.0 16.4 15.9 15.4
81 28.9 28.1 27.2 26.4 25.5 24.7 23.9 23.1 22.3 21.6 20.8 20.1 19.4 18.7 18.1 17.4 16.8 16.2 15.7 15.1
82 28.9 28.0 27.2 26.3 25.5 24.6 23.8 23.0 22.3 21.5 20.7 20.0 19.3 18.6 17.9 17.3 16.6 16.0 15.5 14.9
83 28.8 28.0 27.1 26.3 25.4 24.6 23.8 23.0 22.2 21.4 20.6 19.9 19.2 18.5 17.8 17.1 16.5 15.9 15.3 14.7
84 28.8 27.9 27.1 26.2 25.4 24.5 23.7 22.9 22.1 21.3 20.5 19.8 19.1 18.4 17.7 17.0 16.3 15.7 15.1 14.5
85 28.8 27.9 27.0 26.2 25.3 24.5 23.7 22.8 22.0 21.3 20.5 19.7 19.0 18.3 17.6 16.9 16.2 15.6 15.0 14.4
86 28.7 27.9 27.0 26.1 25.3 24.5 23.6 22.8 22.0 21.2 20.4 19.6 18.9 18.2 17.5 16.8 16.1 15.5 14.8 14.2
87 28.7 27.8 27.0 26.1 25.3 24.4 23.6 22.8 21.9 21.1 20.4 19.6 18.8 18.1 17.4 16.7 16.0 15.4 14.7 14.1
88 28.7 27.8 27.0 26.1 25.2 24.4 23.5 22.7 21.9 21.1 20.3 19.5 18.8 18.0 17.2 16.6 15.9 15.3 14.6 14.0
89 28.7 27.8 26.9 26.1 25.2 24.4 23.5 22.7 21.9 21.1 20.3 19.5 18.7 18.0 17.2 16.5 15.8 15.2 14.5 13.9
90 28.7 27.8 26.9 26.1 25.2 24.3 23.5 22.7 21.8 21.0 20.2 19.4 18.7 17.9 17.2 16.5 15.8 15.1 14.5 13.8
91 28.7 27.8 26.9 26.0 25.2 24.3 23.5 22.6 21.8 21.0 20.2 19.4 18.6 17.9 17.1 16.4 15.7 15.0 14.4 13.7
92 28.6 27.8 26.9 26.0 25.2 24.3 23.5 22.6 21.8 21.0 20.2 19.4 18.6 17.8 17.1 16.4 15.7 15.0 14.3 13.7
93 28.6 27.8 26.9 26.0 25.1 24.3 23.4 22.6 21.8 20.9 20.1 19.3 18.6 17.8 17.1 16.3 15.6 14.9 14.3 13.6
94 28.6 27.7 26.9 26.0 25.1 24.3 23.4 22.6 21.7 20.9 20.1 19.3 18.5 17.8 17.0 16.3 15.6 14.9 14.2 13.6
95 28.6 27.7 26.9 26.0 25.1 24.3 23.4 22.6 21.7 20.9 20.1 19.3 18.5 17.8 17.0 16.3 15.6 14.9 14.2 13.5
96 28.6 27.7 26.9 26.0 25.1 24.2 23.4 22.6 21.7 20.9 20.1 19.3 18.5 17.7 17.0 16.2 15.5 14.8 14.2 13.5
97 28.6 27.7 26.8 26.0 25.1 24.2 23.4 22.5 21.7 20.9 20.1 19.3 18.5 17.7 17.0 16.2 15.5 14.8 14.1 13.5
98 28.6 27.7 26.8 26.0 25.1 24.2 23.4 22.5 21.7 20.9 20.1 19.3 18.5 17.7 16.9 16.2 15.5 14.8 14.1 13.4
99 28.6 27.7 26.8 26.0 25.1 24.2 23.4 22.5 21.7 20.9 20.0 19.2 18.5 17.7 16.9 16.2 15.5 14.7 14.1 13.4
100 28.6 27.7 26.8 26.0 25.1 24.2 23.4 22.5 21.7 20.8 20.0 19.2 18.4 17.7 16.9 16.2 15.4 14.7 14.0 13.4
101 28.6 27.7 26.8 25.9 25.1 24.2 23.4 22.5 21.7 20.8 20.0 19.2 18.4 17.7 16.9 16.1 15.4 14.7 14.0 13.3
102 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.7 20.8 20.0 19.2 18.4 17.6 16.9 16.1 15.4 14.7 14.0 13.3
103 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.7 20.8 20.0 19.2 18.4 17.6 16.9 16.1 15.4 14.7 14.0 13.3
104 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.9 16.1 15.4 14.7 14.0 13.3
105 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.1 15.4 14.6 13.9 13.3
106 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.1 15.3 14.6 13.9 13.3
107 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.1 15.3 14.6 13.9 13.2
108 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.1 15.3 14.6 13.9 13.2
109 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.1 15.3 14.6 13.9 13.2
110 28.6 27.7 26.8 25.9 25.1 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.1 15.3 14.6 13.9 13.2
111 28.6 27.7 26.8 25.9 25.0 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.0 15.3 14.6 13.9 13.2
112 28.6 27.7 26.8 25.9 25.0 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.0 15.3 14.6 13.9 13.2
113 28.6 27.7 26.8 25.9 25.0 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.0 15.3 14.6 13.9 13.2
114 28.6 27.7 26.8 25.9 25.0 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.0 15.3 14.6 13.9 13.2
115 28.6 27.7 26.8 25.9 25.0 24.2 23.3 22.5 21.6 20.8 20.0 19.2 18.4 17.6 16.8 16.0 15.3 14.6 13.9 13.2
</TABLE>
Page 64
<PAGE>
APPENDIX E. LIFE EXPECTANCY TABLES (CONTINUED)
TABLE II (CONTINUED)
(JOINT LIFE AND LAST SURVIVOR EXPECTANCY)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
AGES 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
75 16.5 16.1 15.8 15.4 15.1 14.9 14.6 14.4 14.2 14.0
76 16.1 15.7 15.4 15.0 14.7 14.4 14.1 13.9 13.7 13.5
77 15.8 15.4 15.0 14.6 14.3 14.0 13.7 13.4 13.2 13.0
78 15.4 15.0 14.6 14.2 13.9 13.5 13.2 13.0 12.7 12.5
79 15.1 14.7 14.3 13.9 13.5 13.2 12.8 12.5 12.3 12.0
80 14.9 14.4 14.0 13.5 13.2 12.8 12.5 12.2 11.9 11.6
81 14.6 14.1 13.7 13.2 12.8 12.5 12.1 11.8 11.5 11.2
82 14.4 13.9 13.4 13.0 12.5 12.2 11.8 11.5 11.1 10.9
83 14.2 13.7 13.2 12.7 12.3 11.9 11.5 11.1 10.8 10.5
84 14.0 13.5 13.0 12.5 12.0 11.6 11.2 10.9 10.5 10.2
85 13.8 13.3 12.8 12.3 11.8 11.4 11.0 10.6 10.2 9.9 9.6 9.3 9.1 8.9 8.7 8.5 8.3 8.2 8.0 7.9
86 13.7 13.1 12.6 12.1 11.6 11.2 10.8 10.4 10.0 9.7 9.3 9.1 8.8 8.6 8.3 8.2 8.0 7.8 7.7 7.6
87 13.5 13.0 12.4 11.9 11.4 11.0 10.6 10.1 9.8 9.4 9.1 8.8 8.5 8.3 8.1 7.9 7.7 7.5 7.4 7.2
88 13.4 12.8 12.3 11.8 11.3 10.8 10.4 10.0 9.6 9.2 8.9 8.6 8.3 8.0 7.8 7.6 7.4 7.2 7.1 6.9
89 13.3 12.7 12.2 11.6 11.1 10.7 10.2 9.8 9.4 9.0 8.7 8.3 8.1 7.8 7.5 7.3 7.1 6.9 6.8 6.6
90 13.2 12.6 12.1 11.5 11.0 10.5 10.1 9.6 9.2 8.8 8.5 8.2 7.9 7.6 7.3 7.1 6.9 6.7 6.5 6.4
91 13.1 12.5 12.0 11.4 10.9 10.4 9.9 9.5 9.1 8.7 8.3 8.0 7.7 7.4 7.1 6.9 6.7 6.5 6.3 6.2
92 13.1 12.5 11.9 11.3 10.8 10.3 9.8 9.4 8.9 8.5 8.2 7.8 7.5 7.2 6.9 6.7 6.5 6.3 6.1 5.9
93 13.0 12.4 11.8 11.3 10.7 10.2 9.7 9.3 8.8 8.4 8.0 7.7 7.4 7.1 6.8 6.5 6.2 6.1 5.9 5.8
94 12.9 12.3 11.7 11.2 10.6 10.1 9.6 9.2 8.7 8.3 7.9 7.6 7.2 6.9 6.6 6.4 6.2 5.9 5.8 5.6
95 12.9 12.3 11.7 11.1 10.6 10.1 9.6 9.1 8.6 8.2 7.8 7.5 7.1 6.8 6.5 6.3 6.0 5.8 5.6 5.4
96 12.9 12.2 11.6 11.1 10.5 10.0 9.5 9.0 8.5 8.1 7.7 7.3 7.0 6.7 6.4 6.1 5.9 5.7 5.5 5.3
97 12.8 12.2 11.6 11.0 10.5 9.9 9.4 8.9 8.5 8.0 7.6 7.3 6.9 6.6 6.3 6.0 5.8 5.5 5.3 5.1
98 12.8 12.2 11.5 11.0 10.4 9.9 9.4 8.9 8.4 8.0 7.5 7.2 6.8 6.5 6.2 5.9 5.6 5.4 5.2 5.0
99 12.7 12.1 11.5 10.9 10.4 9.8 9.3 8.8 8.3 7.9 7.5 7.1 6.7 6.4 6.1 5.8 5.5 5.3 5.1 4.9
100 12.7 12.1 11.5 10.9 10.3 9.8 9.2 8.7 8.3 7.8 7.4 7.0 6.6 6.3 6.0 5.7 5.4 5.2 5.0 4.8
101 12.7 12.1 11.4 10.8 10.3 9.7 9.2 8.7 8.2 7.8 7.3 6.9 6.6 6.2 5.9 5.6 5.3 5.1 4.9 4.7
102 12.7 12.0 11.4 10.8 10.2 9.7 9.2 8.7 8.2 7.7 7.3 6.9 6.5 6.2 5.8 5.5 5.3 5.0 4.8 4.6
103 12.6 12.0 11.4 10.8 10.2 9.7 9.1 8.6 8.1 7.7 7.2 6.8 6.4 6.1 5.8 5.5 5.2 4.9 4.7 4.5
104 12.6 12.0 11.4 10.8 10.2 9.6 9.1 8.6 8.1 7.6 7.2 6.8 6.4 6.0 5.7 5.4 5.1 4.8 4.6 4.4
105 12.6 12.0 11.3 10.7 10.2 9.6 9.1 8.5 8.0 7.6 7.1 6.7 6.3 6.0 5.6 5.3 5.0 4.8 4.5 4.3
106 12.6 11.9 11.3 10.7 10.1 9.6 9.0 8.5 8.0 7.5 7.1 6.7 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2
107 12.6 11.9 11.3 10.7 10.1 9.6 9.0 8.5 8.0 7.5 7.1 6.6 6.2 5.9 5.5 5.2 4.9 4.6 4.4 4.2
108 12.6 11.9 11.3 10.7 10.1 9.5 9.0 8.5 8.0 7.5 7.0 6.6 6.2 5.8 5.5 5.2 4.9 4.6 4.3 4.1
109 12.6 11.9 11.3 10.7 10.1 9.5 9.0 8.4 7.9 7.5 7.0 6.6 6.2 5.8 5.5 5.1 4.8 4.5 4.3 4.1
110 12.5 11.9 11.3 10.7 10.1 9.5 9.0 8.4 7.9 7.4 7.0 6.6 6.2 5.8 5.4 5.1 4.8 4.5 4.3 4.0
111 12.5 11.9 11.3 10.7 10.1 9.5 8.9 8.4 7.9 7.4 7.0 6.5 6.1 5.7 5.4 5.1 4.8 4.5 4.2 4.0
112 12.5 11.9 11.3 10.6 10.1 9.5 8.9 8.4 7.9 7.4 7.0 6.5 6.1 5.7 5.4 5.0 4.7 4.4 4.2 3.9
113 12.5 11.9 11.2 10.6 10.0 9.5 8.9 8.4 7.9 7.4 6.9 6.5 6.1 5.7 5.4 5.0 4.7 4.4 4.2 3.9
114 12.5 11.9 11.2 10.6 10.0 9.5 8.9 8.4 7.9 7.4 6.9 6.5 6.1 5.7 5.3 5.0 4.7 4.4 4.1 3.9
115 12.5 11.9 11.2 10.6 10.0 9.5 8.9 8.4 7.9 7.4 6.9 6.5 6.1 5.7 5.3 5.0 4.7 4.4 4.1 3.9
</TABLE>
Page 65
<PAGE>
INDEX
A
Adjusted gross income limitation............................ 10
Deduction phaseout......................................... 11
Filing status.............................................. 11
Modified AGI............................................... 10
AGI limit................................................... 10
- ---------------------------------------------------------------
- ---------------------------------------------------------------
B
Basis....................................................... 27
Broker's commissions......................................... 8
- ---------------------------------------------------------------
- ---------------------------------------------------------------
C
Can you take an IRA deduction chart.......................... 8
Collectibles................................................ 33
Exception.................................................. 33
Community property laws...................................... 8
Compensation................................................. 4
Alimony and separate maintenance............................ 5
Commissions................................................. 4
Not Compensation............................................ 5
Self-employment income...................................... 4
Self-employment loss........................................ 4
Wages, salaries, etc........................................ 4
Contribution limits.......................................... 7
Spousal IRA................................................. 7
Contributions................................................ 6
Annuity or endowment contracts.............................. 8
Both spouses have compensation.............................. 7
Designating the year........................................ 8
Filing before making your contribution...................... 8
Filing status............................................... 7
Form of..................................................... 6
Less than maximum........................................... 7
Not required................................................ 7
Tax-free withdrawal........................................ 15
When to contribute.......................................... 6
Cost basis.................................................. 27
- ---------------------------------------------------------------
- ---------------------------------------------------------------
D
Death benefit exclusion..................................... 30
Deductible contributions..................................... 8
Reporting.................................................. 12
Deduction limits............................................ 10
Full deduction............................................. 10
Reduced or no deduction.................................... 10
Spousal IRA................................................ 12
Deduction phaseout.......................................... 11
Disclosures, required........................................ 6
Distributions............................................... 22
Age 59 1/2 rule............................................ 22
Annuity contracts.......................................... 30
Beneficiaries.............................................. 29
Beneficiary other than spouse.............................. 29
Designated beneficiary..................................... 23
Exceptions to age 59 1/2 rule.............................. 22
Fully or partly taxable.................................... 27
Inherited IRAs............................................. 29
Losses on IRA investments.................................. 29
Minimum.................................................... 24
Reporting and withholding requirements..................... 30
Required................................................... 23
Required beginning date.................................... 23
Retirement bonds........................................... 30
Rollovers............................................... 17,18
Tax treatment.............................................. 27
Divorce..................................................... 20
Qualified domestic relations order......................... 20
Rollovers.................................................. 20
Transfer of interest....................................... 22
Transfers incident to...................................... 22
- ---------------------------------------------------------------
- ---------------------------------------------------------------
E
Employer and employee association trust accounts............. 6
Employer plans............................................... 8
Defined benefit plan........................................ 9
Defined contribution plan................................... 9
Federal judges............................................. 10
Marital status............................................. 10
Married filing a joint return.............................. 10
Married filing separate return............................. 10
Nonvested employees........................................ 10
Receiving retirement benefits.............................. 10
Reservists and volunteer fire fighters..................... 10
Social Security and railroad retirement coverage........... 10
Spouse died................................................ 10
When are you covered?....................................... 9
When are you not covered?.................................. 10
Example, comprehensive...................................... 15
Excess accumulations........................................ 35
Excess Contributions........................................ 33
Excess distributions........................................ 36
- ---------------------------------------------------------------
- ---------------------------------------------------------------
F
Filing status............................................... 11
Married filing separate exception.......................... 11
Forms:
1099-R..................................................... 30
5329....................................................... 35
5498....................................................... 13
8606....................................................... 14
W-2......................................................... 8
- ---------------------------------------------------------------
- ---------------------------------------------------------------
I
Individual retirement account................................ 5
Individual retirement annuity................................ 5
Individual retirement arrangement............................ 3
Inherited IRAs..............................................6,8
Contributions............................................... 8
Distributions.............................................. 24
In general.................................................. 6
Making it your own.......................................... 8
MDIB requirement exception................................. 26
Premature distribution penalty exception................... 23
Rollovers.................................................. 18
Taxation of Distributions.................................. 29
Insufficient Distributions.................................. 35
Investment in collectibles.................................. 32
IRA.......................................................... 3
As a holding account....................................... 19
Conduit..................................................19,21
- ---------------------------------------------------------------
- ---------------------------------------------------------------
K
Kinds of IRAs................................................ 5
- ---------------------------------------------------------------
- ---------------------------------------------------------------
M
Minimum distributions....................................... 24
Incidental benefit requirement............................. 25
Life expectancy............................................ 25
Miscellaneous rules........................................ 26
More than one IRA............................................ 7
- ---------------------------------------------------------------
- ---------------------------------------------------------------
N
Nondeductible contributions................................. 13
Basis...................................................... 13
Otherwise deductible....................................... 14
Penalty for overstatement.................................. 14
Reporting.................................................. 14
Page 66
<PAGE>
Withdrawals............................................... 15
- --------------------------------------------------------------
- --------------------------------------------------------------
P
Penalties.................................................. 32
Excess accumulations...................................... 35
Excess contributions...................................... 33
Excess distributions...................................... 36
Premature distributions (early withdrawals)............... 34
Prohibited transactions................................... 32
Reporting.............................................. 35,36
Premature distributions (early withdrawals)................ 34
Annuity exception......................................... 23
Death exception........................................... 23
Disability exception...................................... 23
Prohibited transactions.................................... 32
Borrowing on an annuity contract.......................... 32
Pledging an account as security........................... 32
- --------------------------------------------------------------
- --------------------------------------------------------------
Q
Qualified domestic relations order......................... 20
- --------------------------------------------------------------
- --------------------------------------------------------------
R
Reduced IRA deduction, how to figure....................... 11
Required distributions..................................... 23
Beneficiaries............................................. 24
IRA owners................................................ 23
Retirement bonds........................................... 6
Rollovers............................................... 17,18
Conduit IRA............................................ 19,21
Direct rollover option.................................... 19
Distributions received by a surviving spouse.............. 20
Distributions under divorce proceedings................... 20
Eligible rollover distribution............................ 18
Extension of rollover period.............................. 17
From employer's plan into an IRA.......................... 18
From one IRA into another................................. 18
Frozen deposit............................................ 17
Keogh plans............................................... 20
Partial rollovers......................................... 18
Reporting.............................................. 18,21
Required distributions.................................... 18
Tax-sheltered annuity..................................... 21
Time limit................................................ 17
Waiting period between rollovers.......................... 18
Withholding requirements.................................. 18
- --------------------------------------------------------------
- --------------------------------------------------------------
S
SEP...................................................... 6,37
Simplified employee pension.............................. 6,37
Contributions............................................. 37
Contributions you make.................................... 39
Definitions............................................... 37
Elective deferrals........................................ 40
Employer's contributions.................................. 39
Excess employer contributions............................. 39
Excludable employees...................................... 37
Highly compensated employee............................... 37
Leased employees.......................................... 37
Limits.................................................... 37
Limits on deferrals....................................... 40
Overall limits on employer contributions.................. 40
Qualifying employee....................................... 37
Salary reduction arrangement.............................. 40
Self-employed individual.................................. 37
Social Security Recipients................................. 10
Spousal IRA............................................... 4,7
Eligibility requirements................................... 4
Spouse has compensation.................................... 7
Spouse under age 70 1/2.................................... 7
Surviving spouse........................................... 20
Distributions received.................................... 20
- --------------------------------------------------------------
- --------------------------------------------------------------
T
Transfers.................................................. 17
Rollovers................................................. 17
Transfers incident to divorce.............................. 22
Trustee's fees.............................................. 8
- --------------------------------------------------------------
- --------------------------------------------------------------
W
When are you covered?........................................ 9
Withdrawals................................................. 15
Tax-free................................................... 15
Withholding................................................. 30
Withholding from IRA distributions outside the United
States..................................................... 31
Withholding allowances...................................... 13
Page 67
<PAGE>
- -------------------------------------
- -------------------------------------
HOW TO GET IRS FORMS AND PUBLICATIONS
- --------------------------------------------------------------------------------
You can visit your local IRS office or order tax forms and publications from
the IRS Forms Distribution Center listed for your state at the address on this
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WHERE TO MAIL YOUR ORDER BLANK FOR FREE FORMS AND PUBLICATIONS
<TABLE>
<CAPTION>
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IF YOU LIVE IN: MAIL TO: OTHER LOCATIONS:
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</TABLE>
DETACH AT THIS LINE
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
1040 Schedule F 1040EZ 2441 & 8822 & Pub. 505 Pub. 554
(1040) Instructions Instructions
- -------------------------------------------------------------------------------------------
Instructions Schedule R Instructions 3903 & 8829 & Pub. 508 Pub. 575
for 1040 & (1040)& for 1040EZ Instructions Instructions
Schedules Instructions
- -------------------------------------------------------------------------------------------
Schedules Schedule 1040-ES 4562 & Pub. 1 Pub. 521 Pub. 590
A&B (1040) SE (1040) (1995) & Instructions
Instructions
- -------------------------------------------------------------------------------------------
Schedule C 1040A 1040X & 4868 & Pub. 17 Pub. 523 Pub. 596
(1040) Instructions Instructions
- -------------------------------------------------------------------------------------------
Schedule Instructions 2106 & 5329 & Pub. 334 Pub. 525 Pub. 910
C-EZ (1040) for 1040A & Instructions Instructions
Schedules
- -------------------------------------------------------------------------------------------
Schedule D Schedule 1 2106-EZ & 8283 & Pub. 463 Pub. 527 Pub. 917
(1040) (1040A) Instructions Instructions
- -------------------------------------------------------------------------------------------
Schedule E Schedule 2 2119 & 8582 & Pub. 501 Pub. 529 Pub. 929
(1040) (1040A) Instructions Instructions
- -------------------------------------------------------------------------------------------
Schedule Schedule 3 2210 & 8606 & Pub. 502 Pub. 550 Pub. 936
EIC (1040A (1040A) & Instructions Instructions
or 1040) Instructions
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Number and street
- --------------------------------------------------------------------------------
City or town State ZIP Code
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 19,125,173
<INVESTMENTS-AT-VALUE> 19,125,173
<RECEIVABLES> 50,595
<ASSETS-OTHER> 891
<OTHER-ITEMS-ASSETS> 848,634
<TOTAL-ASSETS> 20,025,293
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,489
<TOTAL-LIABILITIES> 48,489
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,956,827
<SHARES-COMMON-STOCK> 19,976,804
<SHARES-COMMON-PRIOR> 18,926,759
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 19,976,804
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,067,571
<OTHER-INCOME> 0
<EXPENSES-NET> 289,422
<NET-INVESTMENT-INCOME> 778,149
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 778,149
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 60,737,863
<NUMBER-OF-SHARES-REDEEMED> 60,456,957
<SHARES-REINVESTED> 769,139
<NET-CHANGE-IN-ASSETS> 1,050,045
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 96,398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 385,820
<AVERAGE-NET-ASSETS> 19,174,494
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .041
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .041
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
