As filed with the Securities and Exchange Commission on May 15, 1997
Registration No. 33-25623
811-5690
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 22 X
-
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 22 X
-
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FIRST INVESTORS SERIES FUND
(Exact name of Registrant as specified in charter)
Ms. Concetta Durso
Secretary and Vice President
First Investors Series Fund
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement
It is proposed that this filing will become effective on May 16, 1997 pursuant
to paragraph (b) of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of beneficial
interest, no par value $.01 per share, under the Securities Act of 1933.
Registrant filed a Rule 24f-2 Notice for its fiscal year ending December 31,
1996 on February 27, 1997.
<PAGE>
The sole purpose of this Post-Effective Amendment No. 22 is to electronically
file certain exhibits previously filed with the Commission in paper format.
Parts A and B of this Post-Effective Amendment No. 22 have been filed with the
Commission on April 16, 1997 in Registrant's Post-Effective Amendment No. 21
(File No. 33-25623).
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Financial Statements are set forth in
Part B, Statement of Additional Information
(b) Exhibits:
(1)a./2/ Amended and Restated Declaration of Trust
b. Supplemental Declaration of Trust
(2)/2/ By-laws
(3) Not Applicable
(4) Shareholders' rights are contained in (a)
Articles III, VIII, X, XI and XII of
Registrant's Amended and Restated Declaration of
Trust dated September 19, 1988, as amended
September 22, 1994, previously filed as Exhibit
99.B1 to Registrant's Registration Statement and
(b) Articles III and V of Registrant's By-laws,
previously filed as Exhibit 99.B2 to
Registrant's Registration Statement
(5)a./2/ Investment Advisory Agreement between Registrant
and First Investors Management Company, Inc.
(6)/2/ Underwriting Agreement between Registrant and First
Investors Corporation
(7) Not Applicable
(8)a./2/ Custodian Agreement between Registrant and Irving
Trust Company
b./2/ Supplement to Custodian Agreement between
Registrant and The Bank of New York
c./2/ Custodian Agreement between Registrant and Brown
Brothers Harriman & Co.
(9)a./2/ Administration Agreement between Registrant,
First Investors Management Company, Inc.,
First Investors Corporation and Administrative
Data Management Corp.
b. Schedule A to Administration Agreement
(10)/1/ Opinion of counsel
(11)a./3/ Consent of Independent Accountants
b./2/ Power of Attorney
<PAGE>
(12) Not Applicable
(13) No undertakings in effect
(14)a. First Investors Profit Sharing/Money Purchase
Pension Retirement Plan for Sole Proprietorships,
Partnerships, and Corporations
b. First Investors Individual Retirement Account
c. First Investors 403(b) Custodial Account
d. First Investors SEP-IRA and SARSEP-IRA
(15)a./2/ Amended and Restated Class A Distribution Plan
b./2/ Class B Distribution Plan
(16)/3/ Performance Calculations
(17) Not applicable
(18)/2/ 18f-3 Plan
- ----------
/1/ Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ending December 31, 1996 filed on February 27, 1997.
/2/ Incorporated by reference from Post-Effective Amendment No. 20 to
Registrant's Registration Statement (File No. 33-25623) filed on April 23,
1996.
/3/ Incorporated by reference from Post-Effective Amendment No. 21 to
Registrant's Registration Statement (File No. 33-25623) filed on April
16, 1997.
Item 25. Persons Controlled by or under common control with Registrant
There are no persons controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities
Number of
Record Holders as of
Title of Class May 2, 1997
-------------- --------------------
Class A Class B
Blue Chip Fund 31,760 2,582
Total Return Fund 7,911 168
Special Situations Fund 30,287 2,142
Investment Grade Fund 4,140 204
Insured Intermediate Tax Exempt Fund 303 38
<PAGE>
Item 27. Indemnification
Article XI, Section 1 of Registrant's Declaration of Trust provides as
follows:
Section 1.
Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing of them or any officer, agent, employee or investment
adviser of the Trust, but nothing contained herein shall protect any Trustee
against any liability 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 XI, Section 2 of Registrant's Declaration of Trust
provides as follows:
Section 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (a "Covered Person") shall be indemnified by the Trust
to the fullest extent permitted by law against liability and
against expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding which he
becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened,
and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust
or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or (B) not to have acted
in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office,
<PAGE>
(A) by the court or other body approving the settlement; or
(B) by at least a majority or those Trustees who are
neither interested persons of the Trust nor are
parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed
to a full trial-type inquiry); provided, however,
that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the
Trustees, or by independent counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under the
law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 2 may be paid by the Trust from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the Trust if it
is ultimately determined that he is not entitled to indemnification under this
Section 2; provided, however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c) either a majority
of the Trustees who are neither interested persons of the Trust nor are parties
to the matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is a reason to believe that such Covered Person
will be found entitled to indemnification under this Section 2.
The general effect of this Indemnification will be to indemnify the
officers and Trustees of the Registrant from costs and expenses arising from any
action, suit or proceeding to which they may be made a party by reason of their
being or having been a Trustee or officer of the Registrant, except where such
action is determined to have arisen out of the willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the Trustee's or officer's office.
The Registrant's Investment Advisory Agreement provides as follows:
The Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Company or any Series in connection with the
matters to which this Agreement relate except a
<PAGE>
loss resulting from the willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. Any person, even though also an
officer, partner, employee, or agent of the Manager, who may be or become an
officer, Board member, employee or agent of the Company shall be deemed, when
rendering services to the Company or acting in any business of the Company, to
be rendering such services to or acting solely for the Company and not as an
officer, partner, employee, or agent or one under the control or direction of
the Manager even though paid by it.
The Registrant's Underwriting Agreement provides as follows:
The Underwriter agrees to use its best efforts in effecting the sale and
public distribution of the shares of the Fund through dealers and to perform its
duties in redeeming and repurchasing the shares of the Fund, but nothing
contained in this Agreement shall make the Underwriter or any of its officers
and directors or shareholders liable for any loss sustained by the Fund or any
of its officers, trustees, or shareholders, or by any other person on account of
any act done or omitted to be done by the Underwriter under this Agreement
provided that nothing herein contained shall protect the Underwriter against any
liability to the Fund or to any of its shareholders to which the Underwriter
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties as Underwriter or by reason of its
reckless disregard of its obligations or duties as Underwriter under this
Agreement. Nothing in this Agreement shall protect the Underwriter from any
liabilities which they may have under the Securities Act of 1933 or the
Investment Company Act of 1940.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed 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. See Item 32 herein.
Item 28. Business and Other Connections of Investment Adviser
First Investors Management Company, Inc., the Registrant's Investment
Adviser, also serves as investment adviser to:
First Investors Cash Management Fund, Inc.
First Investors Fund For Income, Inc.
First Investors Global Fund, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Life Series Fund
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Series Fund II, Inc.
First Investors Special Bond Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
<PAGE>
Affiliations of the officers and directors of the Investment Adviser are
set forth in Part B, Statement of Additional Information, under "Directors or
Trustees and Officers."
Item 29. Principal Underwriters
(a) First Investors Corporation, Underwriter of the Registrant, is also
underwriter for:
First Investors Cash Management Fund, Inc.
First Investors Fund For Income, Inc.
First Investors Global Fund, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.
(b) The following persons are the officers and directors of the
Underwriter:
Position and Position and
Name and Principal Office with First Office with
Business Address Investors Corporation Registrant
- ------------------ --------------------- ------------
Glenn O. Head Chairman President
95 Wall Street and Director and Trustee
New York, NY 10005
Marvin M. Hecker President None
95 Wall Street
New York, NY 10005
John T. Sullivan Director Chairman of the
95 Wall Street Board of Trustees
New York, NY 10005
Roger L. Grayson Director Trustee
95 Wall Street
New York, NY 10005
Joseph I. Benedek Treasurer Treasurer
581 Main Street
Woodbridge, NJ 07095
Robert Murphy Comptroller None
581 Main Street
Woodbridge, NJ 07095
<PAGE>
Lawrence A. Fauci Senior Vice President None
95 Wall Street and Director
New York, NY 10005
Kathryn S. Head Vice President, Trustee
581 Main Street Chief Financial
Woodbridge, NJ 07095 Officer and Director
Louis Rinaldi Senior Vice None
581 Main Street President
Woodbridge, NJ 07095
Frederick Miller Senior Vice None
581 Main Street President
Woodbridge, NJ 07095
Howard M. Factor Vice President None
95 Wall Street
New York, NY 10005
Larry R. Lavoie Secretary and None
95 Wall Street General Counsel
New York, NY 10005
Matthew Smith Vice President None
581 Main Street
Woodbridge, NJ 07095
Jeremiah J. Lyons Director None
56 Weston Avenue
Chatham, NJ 07928
Anne Condon Vice President None
581 Main Street
Woodbridge, NJ 07095
Jane W. Kruzan Director None
232 Adair Street
Decatur, GA 30030
Elizabeth Reilly Vice President None
581 Main Street
Woodbridge, NJ 07095
(c) Not applicable
Item 30. Location of Accounts and Records
Physical possession of the books, accounts and records of the Registrant
are held by First Investors Management Company, Inc. and its affiliated
companies, First Investors Corporation and Administrative Data Management Corp.,
at their corporate headquarters, 95 Wall Street, New York, NY 10005 and
administrative offices, 581 Main Street, Woodbridge, NJ 07095, except for those
maintained by the Registrant's Custodians, The Bank of New York, 48 Wall Street,
New York, NY 10286, and Brown Brothers Harriman & Co., 40 Water Street, Boston,
MA 02109.
<PAGE>
Item 31. Management Services
Inapplicable
Item 32. Undertakings
The Registrant undertakes to carry out all indemnification provisions of
its Declaration of Trust, Advisory Agreement and Underwriting Agreement in
accordance with Investment Company Act Release No. 11330 (September 4, 1980) and
successor releases.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the provisions under Item 27 herein, 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 trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, 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.
The Registrant hereby undertakes to furnish a copy of its latest annual
report to shareholders, upon request and without charge, to each person to whom
a prospectus is delivered.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
15th day of May, 1997.
FIRST INVESTORS SERIES FUND
(Registrant)
By: /s/ Glenn O. Head
--------------------------
Glenn O. Head
President and Trustee
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/ Glenn O. Head Principal Executive May 15, 1997
- ------------------------- Officer and Director
Glenn O. Head
/s/ Joseph I. Benedek Principal Financial May 15, 1997
- ------------------------- and Accounting Officer
Joseph I. Benedek
* Director May 15, 1997
- -------------------------
Kathryn S. Head
* Director May 15, 1997
- -------------------------
Roger L. Grayson
* Director May 15, 1997
- -------------------------
Herbert Rubinstein
* Director May 15, 1997
- -------------------------
Nancy Schaenen
* Director May 15, 1997
- -------------------------
James M. Srygley
* Director May 15, 1997
- -------------------------
John T. Sullivan
* Director May 15, 1997
- -------------------------
Rex R. Reed
* Director May 15, 1997
- -------------------------
Robert F. Wentworth
*By: /s/ Larry R. Lavoie
-------------------
Larry R. Lavoie
Attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
99.B1 Supplemental Declaration of Trust
99.B9 Schedule A to Administration Agreement
99.B14.1 Profit Sharing/Money Purchase Pension Plan
99.B14.2 Individual Retirement Account
99.B14.3 403(b) Custodial Account
99.B14.4 SEP-IRA and SARSEP-IRA
SUPPLEMENTAL DECLARATION OF TRUST
FIRST INVESTORS FUND, a Massachusetts business trust (hereinafter
called the "Trust"), hereby certifies to the Secretary of State of the
Commonwealth of Massachusetts as follows:
FIRST: The trust filed a Declaration of Trust dated September 19, 1988
(hereinafter the "Declaration of Trust") with the Secretary of State,
Commonwealth of Massachusetts on September 23, 1988.
SECOND: Pursuant to Article XII, Section 7 of the Declaration of Trust,
the Declaration of Trust is hereby amended to change the name of the Trust to
"FIRST INVESTORS SERIES FUND."
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust have executed this instrument on the 18th day of January, 1990.
/s/David D. Grayson
David D. Grayson
120 Wall Street
New York, NY 10005
/s/Glenn O. Head
Glenn O. Head
120 Wall Street
New York, NY 10005
/s/Andrew J. Donohue
Andrew J. Donohue
120 Wall Street
New York, NY 10005
/s/Robert G. Knott
Robert G. Knott
120 Wall Street
New York, NY 10005
/s/James J. Coy
James J. Coy
120 Wall Street
New York, NY 10005
/s/Herbert Rubinstein
Herbert Rubinstein
120 Wall Street
New York, NY 10005
/s/John T. Sullivan
John T. Sullivan
120 Wall Street
New York, NY 10005
/s/F. William Ortman, Jr.
F. William Ortman, Jr.
120 Wall Street
New York, NY 10005
/s/Rex R. Reed
Rex R. Reed
120 Wall Street
New York, NY 10005
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 18th day of January, 1990, personally came
before me, a Notary Public in and for the State of New York, ANDREW J. DONOHUE,
DAVID D. GRAYSON, GLENN O. HEAD, ROBERT G. KNOTT, JAMES J. COY, HERBERT
RUBINSTEIN, JOHN T. SULLIVAN, F. WILLIAM ORTMAN, JR., and REX R. REED, all of
the parties to the foregoing Supplemented Declaration of Trust known to me
personally to be such, and severally acknowledged the said certificate to be the
act and deed of the signers respectively, and that the facts therein stated are
truly set forth, given under my hand and seal of office the day and year
aforesaid.
/s/Dale Kaplan
Notary Public
(SEAL)
ADMINISTRATION AGREEMENT
SCHEDULE A
Compensation and charges of Administrative Data Management Corp. for
services as Transfer Agent, Dividend Disbursing Agent and Plan Administration,
and for other services under the Administration Agreement.
Opening New Account $5.00 for each account
Processing Payments $0.75 for each payment*
Processing Share Certificates $3.00 per certificate issued
General Account Maintenance $0.65 per account per month
Legal Transfers of Shares $10.00 per transfer
Dividend Processing $0.45 per account per dividend
declared
Partial Withdrawals and
Complete Liquidations $5.00 per transaction
Reports Required by
Governmental Authorities $1.00 for each account
Exchange Fee $5.00 for each exchange of shares
into a Fund
Systematic Withdrawal Plans $1.00 for each SWP check*
OUT-OF-POCKET EXPENSES: In addition to the above charges, the Fund, First
Investors Management Company, Inc. or First Investors Corporation shall
reimburse Administrative Data Management Corp. for all out-of-pocket costs
including but not limited to postage, insurance, forms relating to shareholders
of the Fund, envelopes and other similar items, and will also reimburse
Administrative Data Management Corp. for counsel fees, including fees for the
preparation of the Administration Agreement and review of prospectus and
application forms.
THE ABOVE FEES AND OUT-OF-POCKET EXPENSES APPLY TO THE FOLLOWING FUNDS:
FIRST INVESTORS FUND FOR INCOME, INC., FIRST INVESTORS GLOBAL FUND, INC., FIRST
INVESTORS GOVERNMENT FUND, INC., FIRST INVESTORS HIGH YIELD FUND, INC., FIRST
INVESTORS INSURED TAX EXEMPT FUND, INC., FIRST INVESTORS MULTI-STATE INSURED TAX
FREE FUND, FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC., FIRST INVESTORS
SERIES FUND, FIRST INVESTORS SERIES FUND II, INC., FIRST INVESTORS U.S.
GOVERNMENT PLUS FUND - 1st, 2nd & 3rd SERIES, EXECUTIVE INVESTORS TRUST
*Administrative Data Management Corp. (ADM) bills the Fund. ADM is then paid by
the Fund, after which FIMCO reimburses the Fund.
FIRST INVESTORS GROUP OF
MUTUAL FUNDS
PROFIT SHARING/
MONEY PURCHASE PENSION
RETIREMENT PLAN
ARTICLE I. INTRODUCTION
The Employer hereby establishes this Plan and related Custodial Account to
provide retirement, death and disability benefits for participants and their
beneficiaries. This Plan is a standardized paired prototype defined contribution
plan and is designed to permit adoption of profit sharing provisions, money
purchase pension provisions, or both. The provisions herein and the selections
made by the Employer by execution of the money purchase pension or profit
sharing Application/Adoption Agreement or Agreements, shall constitute the Plan.
It is intended that the Plan and related Custodial Account qualify under
Sections 401 and 501 of the Internal Revenue Code, as amended, as well as under
the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
ARTICLE II. DEFINITIONS
As used in this Plan, the related Custody Agreement and the Application/Adoption
Agreement, the following terms shall have the meanings hereinafter set forth,
unless a different meaning is plainly required by the context:
2.1 "Application/Adoption Agreement" means the written agreement for the
establishment of this Plan and Custody Agreement in connection therewith. The
information contained therein shall be part of this Plan as is set forth fully
herein.
2.2 "Beneficiary" means the person or persons designated by a Participant in
writing to receive benefits upon his or her death. If the designated Beneficiary
predeceases the Participant, or if no valid designation is in effect at the
Participant's death, the Beneficiary shall be deemed to be the Participant's
surviving spouse, of if none, the legal representative of the Participant's
estate.
2.3 "Break in Service" or "One Year Break in Service" means a Plan Year during
all or a part of which the Participant is not employed by Employer and does not
complete more than five hundred (500) Hours of Service with Employer.
2.4 "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
2.5 "Compensation" means compensation, as that term is defined in
<PAGE>
Section 13.5(b), received by a Participant from the Employer for the period
during which he is a Participant, for the taxable year of the Employer ending
with or within the Plan Year. In the case of a Self-Employed Individual,
compensation means the individual's Earned Income from the Employer.
Compensation shall exclude amounts in excess of $200,000 (or such other amount
as may be established by the Secretary of the Treasury pursuant to Section
415(d) of the Code), except that the dollar increase in effect on January 1st of
any calendar year is effective for years beginning in such calendar year and the
first adjustment to the $200,000 limitation is effective on January 1, 1990. If
the Plan determines Compensation on a period of time that contains fewer than
twelve (12) calendar months, then the annual Compensation limit is an amount
equal to the annual Compensation limit for the calendar year in which the
Compensation period begins multiplied by the ratio obtained by dividing the
number of full months in the period by twelve (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 nineteen (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 the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this Section 2.5 prior to the application of
this limitation.
2.6 "Custodial Account" means the account established under the Custodial
Agreement entered into pursuant to Article I and forming a part hereof.
2.7 "Custodian" means the institution identified as such in the
Application/Adoption Agreement or any successor trustee or custodian.
2.8 "Custody Agreement" means the Agreement which is made a part of this Plan
and pursuant to which the Custodial Account is established and maintained.
2.9 "Designated Investment Company" means the investment company or companies,
all of which shall be regulated investment companies within the meaning of
Section 851(a) of the Code and which issue only redeemable stock, underwritten,
distributed or sponsored by First Investors Corporation, and designated or
redesignated by the Employer in the Application/Adoption Agreement and from time
to time by written notice by the Employer to the Custodian with the written
consent of the Custodian.
2.10 "Earned Income" means the net earnings from self-employment in any 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
<PAGE>
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 taxpayer by Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.11 "Effective Date" means the date on which the Plan became effective, as
specified in the Application/Adoption Agreement.
2.12 "Employee" means any person employed by the Employer or any entity required
to be aggregated under Section 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 foregoing sentence as provided in Sections 414(n)
or (o) of the Code.
2.13 "Employer" means:
(a) The corporation, self-employed individual or organization named in the
Application/Adopted Agreement (also referred to herein as the "Applicant");
(b) Any successor corporation or organization to all or a major portion of the
property or business of the Applicant, which elects to continue this Plan with
written approval of the Custodian; and
(c) Such subsidiaries or other affiliated corporations and organizations of the
Employer, or of its successor, which adopts this Plan, and which is approved in
writing by the Custodian.
2.14 "Entry Date" means the date selected in the Application/Adoption Agreement
on which an Employee becomes a Participant in the Plan.
2.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder by the Department of Labor
or the Department of Treasury.
2.16 "First Investors Plans" means contractual plans sponsored by First Investor
Corporation for the accumulation of shares of First Investors Government Fund,
Inc., First Investors High Yield Fund, Inc., First Investors Fund for Income,
Inc., and First Investors Global Fund, Inc., and any other contractual plans
which First Investors Corporation may sponsor at any time.
2.17 "Highly Compensated Employee" means a highly compensated active employee or
a highly compensated former employee, as described below.
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: (i) received compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Section
<PAGE>
415(d) of the Code); (ii) 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 (iii) was an officer of the Employer and
received compensation during such year that is greater than 50 percent of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term
Highly Compensated Employee also includes: (i) 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 (ii) employees who are 5 percent owners at any time during the look-back
year or determination year.
If no officer has satisfied the compensation requirement of (ii) above during
either a determination year or a 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
shall be the twelve (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 fifty-fifth (55th)
birthday.
If an employee is, during a determination year or look-back year, a family
member of either a five (5) percent owner who is an active or former employee or
a Highly Compensated Employee who is one of the ten (10) most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the five percent (5%) owner or top-ten (10)
Highly Compensated Employees shall be aggregated. In such case, the family
member and five percent (5%) owner or top-ten Highly Compensated Employees 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 five percent (5%) owner or ten (10) Highly Compensated
Employees. 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 one hundred (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.
<PAGE>
2.18 "Hour 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 shall 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 service or leave of absence. No more than five hundred and one
(501) Hours of Service shall 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 are
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 shall not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours shall 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.
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)), or a group of trades or businesses under
common control (under Section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to Section 414(o) and the regulations thereunder. Hours of Service will
also be credited for any individual considered an employee for purposes of this
Plan under Section 414(n) or Section 414(o) and the regulations thereunder.
Solely for determining whether a Break in Service has occurred in a computation
period, for participation and vesting purposes, 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, eight (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 absence (i) by
reason of the pregnancy of the individual, (ii) by reason of a birth of a child
of the individual, (iii) by reason of the placement of a child with the
individual in connection with the adoption of such child by such individual, or
(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of
<PAGE>
Service credited under this paragraph shall be credited (i) in the computation
period in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or (ii) in all other cases, in the following
computation period.
(d) "Hours of Service" shall be determined on the basis of the method selected
by the Employer in the Application/Adoption Agreement.
2.19 "Insurer" means First Investors Life Insurance Company, a legal reserve
life insurance company.
2.20 "Key Employee" means 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 fifty percent
(50%) of the dollar limitation under Section 415(b)(1)(A) of the Code, an owner
(or one who is considered an owner under Section 318 of the Code) of one of the
ten (10) largest interests in the Employer if such individual's compensation
exceeds one hundred percent (100%) of the dollar limitation under Section
415(c)(1)(A) of the Code, a five percent (5%) owner of the Employer, or a one
percent (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(a)(8), Section 402(h) or Section 430(b) of the
Code. The determination period for the first Plan Year is the first Plan Year.
The determination period for each subsequent Plan Year is the five (5) 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.
2.21 "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 service for the recipient (or for
any 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: (i)
such employee is covered by a money purchase pension plan providing (a) a
nonintegrated employer contribution rate of at least 10 percent 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 420(a)(8), Section 402(h) or
Section 403(b) of the Code, (b) immediate
<PAGE>
participation, and (3) full and immediate vesting; and (ii) Leased Employees do
not constitute more than twenty percent (20%) of the recipient's non-Highly
Compensated Employee workforce.
2.22 "Military Service" shall mean a leave of absence granted by the Employer
for service in the armed forces of the United States of America which shall be
counted in determining Hours of Service under the Plan, provided such Employee
returns to employment with the Employer within ninety (90) days of his or her
release from active Military Service or any longer period during which his or
her right to reemployment is protected by law.
2.23 "Named Fiduciary" means the Plan Administrator and any other person who is
specifically so designated by the Employer.
2.24 "Net Profits" means current and accumulated earnings of the Employer before
federal and state taxes and contributions to this Plan and any other qualified
plan, as determined in accordance with generally accepted accounting principles.
2.25 "Normal Retirement Age" means the attainment of age sixty-five (65) or such
other date as specified in the Application/Adoption Agreement. If the Employee
enforces a mandatory age, the Normal Retirement Age is the lesser of that
mandatory age or the age specified in the Application/Adoption Agreement. If,
for Plan Years beginning before January 1, 1988, the Normal Retirement Age was
determined with reference to the anniversary of the participation commencement
date (more than five (5) but not to exceed ten (10) years), the anniversary date
for Participants who first commenced participation under the Plan before the
first Plan Year beginning on or after January 1, 1988 shall be the earliest of
(a) the tenth anniversary of the date the Participant commenced participation in
the Plan (or such anniversary as had been elected by the Employer, if less than
ten (10)), or (b) the fifth anniversary of the first day of the first Plan Year
beginning after January 1, 1988. The participation commencement date is the
first day of the first Plan Year in which the Participant commenced
participation in the Plan.
2.26 "Owner-Employee" means an individual who is a sole proprietor, or who is a
partner owning more than ten percent (10%) of either the capital or profits
interests of a partnership.
2.27 "Participant" means a person who has met the eligibility requirements set
forth in the Application/Adoption Agreement and whose account hereunder has been
neither completely forfeited nor completely distributed.
2.28 "Plan" means the paired prototype defined contribution profit sharing and
money purchase pension plan provided under this basic plan document. References
to the Plan shall refer to the profit sharing provisions, the money purchase
pension provisions, or both, as the context may require.
<PAGE>
2.29 "Plan Administrator" means the Employer or such other party or parties
designated by the Employer, who shall also be the Named Fiduciary for the
administration of the Plan.
2.30 "Plan Year" means the 12 consecutive month fiscal year of the Employer
unless another period is indicated in the Application/Adoption Agreement.
2.31 "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,
or an individual who would have had Earned Income for the taxable year but for
the fact that the trade or business had no net profits for the taxable year.
2.32 "Shareholder-Employee" means an employee or officer of an electing small
business corporation (within the meaning of Section 1361(a)(1) of the Code) who
owns (or is considered to own within the meaning of Section 318(a)(1) of the
Code), on any day during the taxable year of such corporation, more than five
percent (5%) of the outstanding stock of such corporation.
2.33 "Sponsor" means the sponsoring organization, First Investors Corporation.
2.34 "Total and Permanent Disability" means the inability of a Participant to
engage in any substantial gainful activity because of any medically determinable
physical or mental impairment which can be expected to result in death or to be
of long, continued and indefinite duration. The permanence or degree of such
impairment shall be supported by medical evidence.
2.35 "Year of Service" for vesting purposes means a Plan Year during which an
Employee completed for the Employer the minimum number of Hours of Service (not
more than one thousand (1,000)) indicated in the Adoption Agreement. For the
purposes of determining eligibility to participate, a Year of Service shall mean
such minimum number of Hours of Service (not more than one thousand (1,000))
indicated in the Adoption Agreement beginning with the twelve (12)-month period
commencing with the first Hour of Service performed by the Employee and each
Plan Year beginning after such Hour of Service. If an Employee earns a Year of
Service credit during the first twelve (12)-month period commencing with his or
her first Hour of Service and if such Employee earns an additional Year of
Service credit during the Plan Year commencing during such twelve (12)-month
period, then he or she shall be credited with two (2) Years of Service for
purposes of eligibility to participate.
ARTICLE III. ADMINISTRATION
3.1 Named Fiduciary and Plan Administrator
(A) The Plan Administrator is charged with the complete control and management
of the operation, administration and interpretation
<PAGE>
of the Plan. The Plan Administrator shall be appointed by the Employer in the
Money Purchase Pension or Profit Sharing Application/Adoption Agreement or
Agreements, but if no Plan Administrator is appointed, the Employer shall be the
Plan Administrator. The Plan Administrator may employ such agents as is deemed
desirable or necessary to assist in the performance of the duties hereunder. To
the extent such persons are performing duties as a fiduciary under ERISA, such
employment shall constitute a delegation of fiduciary responsibility under
Section 405(c) of ERISA.
(b) The Administrator or any other fiduciary may serve in more than one
fiduciary capacity with respect to the Plan.
3.2 The Plan Administrator may adopt such rules as it deems necessary,
desirable, or appropriate for the administration of the Plan. All rules and
decisions of the Plan Administrator shall be applied uniformly and consistently
to all Participants in similar circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled to rely upon information
furnished by a Participant or Beneficiary, the Employer, the legal counsel of
the Employer, or the Custodian.
3.3 The Employer shall take all action and prepare and file all documents and
reports necessary or appropriate under ERISA and any other applicable Federal
law.
3.4 Any Participant or Beneficiary under the Plan may file a written claim for
Plan benefits with the Plan Administrator or with a person named by the Plan
Administrator to receive claims under the Plan.
3.5 In the event of a denial of any benefit or payment due to or requested by
any Participant or Beneficiary under the Plan ("claimant"), claimant shall be
given a written notification containing specific reasons for the denial. The
written notification shall contain specific references to the pertinent Plan
provisions on which the denial of his or her benefit is based. In addition, it
shall contain a description of any other material or information necessary for
the claimant to perfect a claim, and an explanation of why such material or
information is necessary. The notification shall further provide appropriate
information as to the steps to be taken if the claimant wishes to submit his or
her claim for review. This written notification shall be given to a claimant
within ninety (90) days after receipt of his or her claim by the Plan
Administrator unless special circumstances require an extension of time for
processing the claim.
In the event of a denial of a claim for benefits, the claimant or his or her
duly authorized representative shall be permitted to review pertinent documents
and to submit to the Plan Administrator issues and comments in witting. In
addition, the claimant or his or her duly authorized representative may make a
written request for a full and fair review of his or her claim and its denial by
<PAGE>
the Plan Administrator; provided, however, that such written request must be
received by the Plan Administrator (or its delegate to receive such requests)
within sixty (60) days after receipt by the claimant of written notification of
the denial of the claim. The sixty (60) day requirement may be waived by the
Plan Administrator in appropriate cases.
3.6 A decision on review of a claim for benefits shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of time
for processing the decision, it may be postponed on written notice to the
claimant (prior to the expiration of the initial sixty (60) day period) for an
additional sixty (60) days, but in no event shall the decision be rendered more
than one hundred twenty (120) days after the receipt of such request for review.
Any decision by the Plan Administrator shall be furnished to the claimant in
writing and shall set forth the specific reasons for the decision and the
specific Plan provisions on which the decision is based.
ARTICLE IV. ELIGIBILITY
4.1 Each Employee of the Employer shall become a Participant in the Plan as of
the first Entry Date following the date the Employee satisfies the minimum age
and service requirements selected by the Employer in the Application/Adoption
Agreement. If no age and service requirements are selected by the Employer, an
Employee will become a Participant on the date he or she first performs an Hour
of Service for the Employer. An Employee will become a Participant no later than
the earlier of (a) the first day of the Plan Year beginning after the date on
which the Employee has met the minimum age and service requirements or (b) six
(6) months after the date the requirements are met.
4.2 All Years of Service with the Employer are counted towards eligibility
except that in the case of a former Participant who does not have any
nonforfeitable right to the account balance derived from Employer contributions,
Years of Service before a period of consecutive One Year Breaks in Service will
not be taken into account in computing eligibility service if the number of
consecutive One Year Breaks in Service equals or exceeds the greater of five (5)
or the aggregate number of Years of Service before such Breaks in Service. Such
aggregate number of Years of Service will not include any Years of Service
disregarded under the preceding sentence by reason of a prior Break in Service.
If such former Participant's Years of Service before termination from service
may not be disregarded pursuant to the preceding sentence, such former
Participant shall participate immediately upon returning to the employ of the
Employer.
4.3 A former Participant will become a Participant immediately upon returning to
the employ of the Employer if such former Participant had a nonforfeitable right
to all or a portion of the account balance derived from Employer contributions
at the time of termination from service.
<PAGE>
4.4 Employees covered by a collective bargaining agreement between the Employer
and Employee representatives under which retirement benefits were the subject of
good faith bargaining are not eligible to participate in this Plan, provided
that no more than two percent of the Employees of the Employer who are covered
pursuant to that agreement are professionals as defined in Section 1.410(b)-9(q)
of the proposed regulations. For this purpose, "employee representative" does
not include any organization more than one-half of whose members are Employees
who are owners, officers, or executives of the Employer. In the event a
Participant is no longer a member of an eligible class of Employees and becomes
ineligible to participate but has not incurred a Break in Service, such Employee
will participate immediately upon returning to an eligible class of Employees.
If such Participant incurs a Break in Service, eligibility will be determined
under the Break in Service rules of the Plan. In the event an Employee who is
not a member of an eligible class of Employees becomes a member of an eligible
class, such Employee will participate immediately if such Employee has satisfied
the minimum age and service requirements and would have otherwise previously
become a Participant.
4.5 If life insurance policies are to be purchased in respect of an Employee, he
or she shall become a Participant as of the date on which he or she shall become
eligible to participate, if within thirty (30) days of the date he or she is
advised of his or her eligibility for participation, he or she assents to a
written application by the Employer for a policy on his or her life.
4.6 The Employer shall notify each Employee, in writing, of his or her
eligibility to participate in the Plan not less than thirty (30) days prior to
any Entry Date on which the Employee becomes eligible for participation, and
similar notice shall be given to the Insurer.
4.7 An Employee who fails to perform the act prescribed by Section 4.5 within
the required time shall forfeit his right to become a Participant until the next
succeeding Entry Date.
4.8 By assenting to a written application for a Policy, each Employee who
becomes a Participant shall be deemed for all purposes to have conclusively
assented to the provisions of this Plan as embodied herein, including any
amendment hereto, and also to have assented to all of the terms of any and all
policies issued by the Insurer on his or her life; and each Employer, and the
estate of an Employee or his or her Beneficiary, shall be bound thereby as if
each had formally executed the Application/Adoption Agreement and had
individually purchased the policy or policies.
<PAGE>
ARTICLE V. CONTRIBUTIONS
5.1 By the Employer.
(a) Profit Sharing Contributions. For each Plan Year, the Employer shall
contribute to the Custodial Account an amount as may be determined by the
Employer in accordance with the profit sharing formula set forth in the
Application/Adoption Agreement.
(b) Money Purchase Pension Contributions. For each Plan Year, the Employer shall
contribute to the Custodial Account an amount equal to such uniform percentage
of Compensation of each eligible Participant as determined by the Employer in
accordance with the money purchase pension contribution formula selected in the
Application/Adoption Agreement.
(c) Eligible Participants. Subject to the minimum allocation rules in Section
6.2, Participants who are employed on the last day of the Plan Year or, for Plan
Years beginning on or after January 1, 1990, complete more than 500 Hours of
Service during the Plan Year shall be eligible to share in the Employer
contributions. An Employer may elect in the Application/Adoption Agreement to
allocate a contribution on behalf of a Participant who terminates employment
before the end of a Plan Year beginning before January 1, 1990, or on behalf of
a Participant who terminates employment with 500 or fewer Hours of Service in a
Plan year beginning on or after January 1, 1990.
(d) Contribution Limitation. In no event shall any Employer contributions exceed
the maximum amount deductible from the Employer's income under Section 404 of
the Code, or the maximum limitations under Section 415 of the Code provided in
Article XIII.
(e) Payment. All Employer Contributions to the Custodial Account for the
Profit-Sharing Plan for any Plan Year shall be made in money either in one lump
sum or in installments within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the Employer's federal
income tax return for the taxable year with or within which such Plan Year ends.
All Employer Contributions to the Custodial Account for the Money Purchase
Pension Plan for any Plan Year shall be made in money either in one lump sum or
in installments within the time prescribed by regulations under Section
412(c)(10) of the Code.
5.2 By Participants.
(a) If selected by the Employer in the Application/Adoption Agreement, each
Participant may contribute on behalf of himself or herself an additional
non-deductible amount of money. Any such contribution by a Participant shall be
voluntary on his or her part and shall not be a condition to the allocation of
any part of the contribution of the Employer to the Participant, nor shall the
Employer or the Custodian be responsible for determining the amount of the
contribution by the Employee. Such contributions may be made by payroll
deductions or such other means as the Employer may determine, to the extent
permitted by applicable law.
<PAGE>
(b) All contributions by a Participant shall be credited solely to his or her
account and held for the purposes of the Plan as hereinafter provided. Such
Employee contributions shall be used only for the purpose of providing benefits
to the individual contributor in addition to the benefits provided by the
Employer's contributions. Such amounts shall not be segregated for investment
purposes but shall be valued in the same manner as the other portions of the
Participant's account.
(c) The Employer shall furnish to each Employee who makes contributions to the
Plan on his or her own behalf a current prospectus of the Designated Investment
Company or Companies in which such contribution is to be invested.
(d) Notwithstanding the foregoing provisions of this Section 5.2, this Plan will
not accept nondeductible Employee contributions for Plan Years beginning after
the Plan Year in which this Plan is adopted by the Employer. Employee
contributions for Plan Years beginning after December 31, 1986, will be limited
so as to meet the nondiscrimination test of Section 401(m).
5.3 Transfer of Assets or Rollovers from Other Plans.
(a) Subject to the approval of the Plan Administrator, the Custodian shall
accept a direct transfer of assets from the trustee or custodian of any other
qualified plan described in Section 401(a) of the Code or from a qualified
annuity plan described in Section 403(a) of the Code to be held for the benefit
of any Participant to the full extent permitted by the Code.
(b) Subject to the approval of the Plan Administrator, the Custodian shall
accept rollover amounts within the meaning of Section 402(a)(5) of the Code.
(c) Any transfer of assets or rollover to the Custodial Account shall be
credited to the Participant's transfer account or rollover account, as the case
may be, established under Section 6.1 and separately accounted for. Such assets
shall be liquidated promptly and the proceeds shall be invested in Designated
Investment Company shares. The Plan Administrator shall ensure that the transfer
account preserves all optional forms of benefits of the transferor plan
protected by Section 411(d)(6) of the Code and the regulations thereunder.
5.4 Administration of Contributions.
Contributions made under Section 5.2 shall be remitted by contributing
Participants to the Custodian through the Employer and not by the Participants
directly. The Employer may commingle contributions made under Sections 5.1 and
5.2, but shall instruct the Custodian to credit the amount of each Section 5.1
and each Section 5.2 contribution to separate accounts for each Participant. The
Employer shall keep records of the amounts of each Section 5.1 and each Section
5.2 contribution, respectively, to be credited to each participant's account and
the dates he or she remits them to the Custodian.
<PAGE>
ARTICLE VI. ALLOCATION OF CONTRIBUTIONS
6.1 Individual Accounts.
The Plan Administrator shall establish and maintain a separate account or
accounts in the name of each Participant. The following accounts, where
applicable, shall be established in the name of the Participant:
(a) A profit-sharing contribution account shall credit each such Participant's
share of Employer contributions, forfeitures (if allocated among Participants)
and earnings on such amount, which shall be allocated in the manner selected in
the Application/Adoption Agreement.
(b) A money purchase pension contribution account shall credit each such
Participant's share of Employer contributions, forfeitures (if allocated among
Participants) and earnings on such amounts, which shall be allocated in the
manner selected in the Application/Adoption Agreement.
(c) A voluntary contribution account shall credit voluntary contributions, if
any, made by the Participant under Section 5.2.
(d) A transfer of assets account shall credit contributions to the Custodial
Account accepted under Section 5.3.
(e) A rollover account shall credit rollover contributions to the Custodial
Account accepted under Section 5.3.
6.2 Minimum Allocation.
(a) If the Employer does not maintain any qualified defined benefit plan in
addition to this Plan, except as provided in (b) and (c) 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 three percent (3%) of such
Participant's compensation (as defined in Section 13.5(b)) or the largest
percentage of Employer contributions and forfeitures, as a percentage of the
first $200,000 of the Key Employee's compensation (as defined in Section
13.5(b)) allocated on behalf of any Key Employee for that year. The minimum
allocation is determined without regard to any Social Security contributions.
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 the
Participant's failure to complete 1,000 Hours of Service.
(b) In the event the Employer maintains any qualified defined benefit plan in
addition to this Plan, the Employer will provide a minimum allocation at least
equal to five percent (5%)
<PAGE>
of compensation (as defined in Section 13.5(b)) to each Participant who is not a
Key Employee and who is entitled under (a) above to receive a minimum
allocation.
(c) The provisions in (a) and (b) above shall not apply to any Participant who
completed 500 or fewer Hours of Service during the Plan Year and was not
employed by the Employer on the last day of the Plan Year.
(d) If the Employer enters into both the profit sharing Application/Adoption
Agreement and the money purchase pension Application/Adoption Agreement under
this Plan, to avoid a duplication of the minimum allocation under this Section
6.2, contributions that are sufficient to satisfy the minimum allocation
requirements of this Section 6.2 shall be made exclusively to the money purchase
pension plan. However, for plan years beginning after December 31, 1991, if the
profit sharing plan and money purchase pension plan do not benefit the same
participants, the minimum allocation required by this Section 6.2 shall be made
under both the profit sharing plan and money purchase pension plan.
(e) The minimum allocation required under this Section 6.2 (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
6.3 Allocation of Employer Contributions.
(a) All profit-sharing contributions will be allocated to the account of each
Participant in the ratio that such Participant's Compensation bears to the
Compensation of all Participant's.
(b) All money purchase pension contributions for a given Plan Year shall be
allocated to the account of the Participant for whom such contribution was made.
6.4 (a) Any forfeiture from a participant's profit sharing contribution account
arising under the Plan for a given Plan Year shall be allocated among
Participants in the same manner as contributions are allocated, as selected by
the Employer in the Application/Adoption Agreement.
(b) Any forfeiture from a Participant's money purchase pension contribution
account arising under the Plan for a given Plan Year shall either be applied to
reduce the Employer contribution for that Plan Year under Section 6.1(a), or in
succeeding Plan Years if necessary, or, for Plan Years beginning after December
31, 1995, allocated among participants in the ratio that each Participant's
Compensation bears to the Compensation of all Participants, as selected by the
Employer in the Application/Adoption Agreement.
<PAGE>
6.5 Withdrawals and Distributions.
Any distribution to a Participant or his or her Beneficiary or any withdrawal by
a Participant shall be charged to the appropriate account(s) of the Participant
as of the date of the distribution or the withdrawal.
ARTICLE VII. VESTING
7.1 All contributions made by the Employer to the Participant's money purchase
pension contribution account and profit-sharing contribution account shall be
fully vested and nonforfeitable upon the Participant's death while in the employ
of the Employer, Total and Permanent Disability, or the attainment of Normal
Retirement Age.
7.2 All voluntary contributions made by the Participant and all investments made
with such contributions, and the earnings thereon, shall immediately become and
at all times remain fully vested and nonforfeitable.
7.3 A Participant's interest in contributions made on his or her behalf by the
Employer shall be vested to the extent and in the manner set forth on the
Application/Adoption Agreement.
7.4 In the case of any Participant who has incurred a One Year Break in Service,
Years of Service before such Break will not be taken into account for purposes
of determining the Participant's vested interest until the Participant has
completed a Year of Service after such Break in Service.
7.5 In the case of a Participant who has five (5) or more consecutive One Year
Breaks in Service, the Participant's pre-Break service will count for vesting
purposes only if either:
(a) such Participant has any nonforfeitable interest in his or her account
balance attributable to Employer contributions at the time of separation from
service, or
(b) upon returning to service the number of consecutive One Year Breaks in
Service is less than the number of Years of Service.
7.6 In the case of a Participant who has five (5) or more consecutive One Year
Breaks in Service, all service after such Breaks in Service will be disregarded
for the purpose of vesting in the Employer-derived account balance that accrued
before such Breaks in Service. Separate accounts will be maintained by the
Employer for the Participant's pre-Break and post-Break Employer-derived account
balance. Both accounts will share in the earning and losses of the Custodial
Account.
7.7 (a) If a Participant terminates service with the Employer, and the value of
the Participant's vested account balance derived from Employer and employee
contributions is not greater than $3,500, the Participant will receive, as soon
as practicable following his or her termination of service, a lump sum
distribution of the value of the entire vested portion of such
<PAGE>
account balance. Upon such distribution, the nonvested portion will be treated
as a forfeiture. For purposes of this Section 7.7(a), if the value of a
Participant's vested account balance is zero, the employee shall be deemed to
have received a distribution of such vested account balance. A Participant's
vested 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.
(b) If a Participant terminates service with the Employer, and the value of the
Participant's vested account balance derived from Employer and employee
contributions is greater than $3,500, the Participant will receive, as soon as
practicable following his or her termination of service, a lump sum distribution
of the value of the entire vested portion of such account balance, provided the
Participant elects, in accordance with the requirements of Section 9.8, to
receive the distribution. Upon such distribution, the nonvested portion will be
treated as a forfeiture.
(c) If a Participant receives a distribution pursuant to this Section 7.7 which
is less than the value of the Participant's account balance derived from
Employer contributions, and resumes employment covered under this Plan, the
Participant's account will be restored by the Employer to the amount on the date
of the distribution if the Participant repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of five
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive One-Year Breaks in Service following the date of distribution. If a
Participant is deemed to receive a distribution pursuant to Section 7.7(a), and
the Participant resumes employment covered under this Plan before the date the
Participant incurs five (5) consecutive One-Year Breaks in Service, upon the
reemployment of such Participant, the Employer-derived account balance of the
Participant will be restored to the amount on the date of such deemed
distribution.
7.8 No amendment to the vesting schedule shall deprive a Participant of his or
her nonforfeitable rights to benefits accrued to the date of the amendment.
Further, if the vesting schedule of the Plan is amended, or if the Plan is
amended in any way that directly or indirectly affects the computation of a
Participant's nonforfeitable percentage, each Participant with at least three
(3) Years of Service with the Employer may elect, within a reasonable period
after the adoption of the amendment, to have his or her nonforfeitable
percentage computed under the Plan without regard to such amendment. For
Participants who do not have at least one (1) Hour of Service in any Plan Year
beginning after December 31, 1988, the preceding sentence shall be applied by
substituting "five (5) Years of Service" for "three (3) Years of Service" where
such language appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the later of:
<PAGE>
(i) Sixty (60) days after the amendment is adopted;
(ii) Sixty (60) days after the amendment becomes effective; or
(iii) Sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
7.9 All of Employee's Years of Service with the Employer shall be counted to
determine the nonforfeitable percentage of his or her account balance derived
from Employer contributions, except as provided in Sections 7.4, 7.5 and 7.6
above.
7.10 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 account balance may be reduced to the extent
permitted under Section 412(c)(8) of the Code. For purposes of this paragraph, a
Plan amendment which has the effect of decreasing a Participant's account
balance 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 the 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 nonforfeitable
percentage (determined as of such date) of such Employee's right to his or her
Employer-derived accrued benefit will not be less than his or her percentage
computed under the Plan without regard to such amendment.
ARTICLE VIII. PAYMENT OF BENEFITS
8.1 When a Participant ceases to be in the service of the Employer, whether by
reason of death or otherwise, the Employer shall have his or her vested interest
determined.
8.2 In the event that a Participant's service is terminated prior to Normal
Retirement Age for reasons other than those of death or Total and Permanent
Disability, any distribution to the Participant shall be made in accordance with
Section 7.7 and in a manner provided by Section 8.4. If the value of the
Participant's vested account balance derived from Employer and employee
contributions exceeds $3,500 and such Participant does not elect to receive a
distribution upon termination of service, the Participant's vested benefits will
be paid to him or her upon attainment of Normal Retirement Age in accordance
with Section 8.4, or to his or her Beneficiary upon his death, whichever comes
first.
8.3 Any Participant who has made contributions on behalf of himself or herself
may, upon thirty (30) days written notice filed with the Employer, withdraw all
or any portion of the lesser of the amounts specified in clauses (a) and (b)
below:
(a) The aggregate amount of such contributions (but not including any earnings
thereon), or
<PAGE>
(b) The fair market value of the Investment Company shares purchased with the
aggregate amount of such contributions. No forfeitures will occur solely as a
result of a Participant's withdrawal of Employee contributions.
8.4 Except as otherwise provided in Article IX, Joint and Survivor Annuity
Requirements, if the Participant's employment terminates on or after Normal
Retirement Age, the Participant's benefits shall be distributed in accordance
with one of the methods selected by the Employer in the Application/Adoption
Agreement. The Participant shall select the method of distribution.
8.5 If a Participant becomes Totally and Permanently Disabled, the amount
credited to his account may be distributed to him or her commencing at any time
within six (6) months after the date of such disability in accordance with
Section 8.4.
8.6 Unless the Participant elects otherwise, distribution of benefits will begin
no later than the sixtieth (60th) day after the latest of the close of the Plan
Year in which:
(a) the Participant attains age sixty-five (65) (or Normal Retirement Age, if
earlier);
(b) occurs the tenth(10th) anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) the Participant terminates service with the Employer.
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 9.8 of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this Section.
8.7 If the Participant dies before all of his or her vested account balance has
been distributed, the remaining portion shall be paid to his or her Beneficiary.
The Beneficiary may elect to receive the remaining portion in either a single
sum or in installments over a period certain.
If this Plan is a profit sharing plan, a married Participant may not designate
as his or her primary Beneficiary any one other than his or her spouse, without
the written consent of his or her spouse. The spouse's consent must satisfy the
following requirements:
(a) The spouse's consent must be in writing;
(b) The spouse's consent must be witnessed by a Plan representative or a notary
public;
(c) The spouse's consent must approve a designation of a specific Beneficiary,
including any class of Beneficiaries or any contingent
<PAGE>
Beneficiaries, which may not be changed without spousal consent (or the spouse
expressly permits designations by the Participant without any further spousal
consent); and
(d) The spouse's consent acknowledges the effect of the Participant's
designation of Beneficiary.
Any consent by a spouse obtained under this provision (or establishment that the
consent of the 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 that the
spouse voluntarily elects to relinquish such right. If it is established to the
satisfaction of a Plan representative that the Participant does not have a
spouse or the spouse cannot be located, spousal consent shall not be required.
8.8 In the event that any benefits under this Plan are to be paid by means of
the distribution of a paid-up annuity contract, such contract must be
nontransferable, and the terms of such contract shall comply with the
requirements of this Plan.
ARTICLE IX. JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 The provisions of this Article IX shall apply to any Participant who is
credited with at least one (1) Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 9.7.
9.2 Qualified Joint and Survivor Annuity. Unless an optional form of benefit is
selected pursuant to a qualified election within the ninety (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.
9.3 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.
The surviving spouse may elect subsequent to the Participant's death to waive
the qualified preretirement survivor annuity and choose to receive benefits in
any other form permitted by the Plan.
<PAGE>
9.4 Definitions
(a) Election period:
The period which begins on the first day of the Plan Year in which the
Participant attains age thirty-five (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 thirty-five (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.
A Participant who will not yet attain age thirty-five (35) as of the end of any
current Plan Year may make a 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 thirty-five (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 9.5(a). Qualified preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan Year in which the
Participant attains age thirty-five (35). Any new waiver on or after such date
shall be subject to the full requirements of this Article.
(b) Earliest retirement age:
The earliest date on which, under the Plan, the Participant could elect to
receive retirement benefits.
(c) 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 designation 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)
<PAGE>
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 9.5
below.
(d) 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 fifty percent (50%) and not more
than one hundred percent (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 fifty percent
(50%).
(e) 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.
(f) Annuity starting date:
The first day of the first period for which an amount is paid as an annuity or
any other form.
(g) Vested account balance:
The aggregate value of the Participant's vested account balances derived from
Employer and 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 Article shall apply to a Participant
who is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
9.5 Notice Requirements
(a) In the case of a qualified joint and survivor annuity, the Plan
Administrator shall, no less than thirty (30) days and no more than ninety (90)
days prior to the annuity starting date, provide each Participant a written
explanation of: (i) the terms and conditions of a qualified joint and survivor
annuity; (ii) the
<PAGE>
Participant's right to make and the effect of an election to waive the qualified
joint and survivor annuity form of benefit; (iii) the rights of a Participant's
spouse; and (iv) the right to make, and the effect of, a revocation of a
previous election to waive the qualified joint and survivor annuity.
(b) In the case of a qualified preretirement survivor annuity as described in
Section 9.3 of this Article, 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 9.5(a) applicable to a qualified joint and survivor
annuity.
The applicable period for a Participant is whichever of the following periods
ends last: (i) the period beginning with the first day of the Plan Year in which
the Participant attains age thirty-two (32) and ending with the close of the
Plan Year preceding the Plan Year in which the Participant attains age
thirty-five (35); (ii) a reasonable period ending after the individual becomes a
Participant; (iii) a reasonable period ending after Section 9.5(c) ceases to
apply to the Participant; or (iv) a reasonable period ending after this Article
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
thirty-five (35).
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii), (iii) and (iv) is the end of the
two (2)-year period beginning one (1) year prior to the date the applicable
event occurs, and ending one (1) year after that date. In the case of a
Participant who separates from service before the Plan Year in which age
thirty-five (35) is attained, notice shall be provided within the two (2)-year
period beginning one (1) year prior to separation and ending (1) year after
separation. If such a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
(c) Notwithstanding the other requirements of this Section 9.5, the respective
notices prescribed by this Section need not be given to a Participant if (1) the
Plan "fully subsidizes" the costs of a qualified joint and survivor annuity or
qualified preretirement survivor annuity, and (2) 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 9.5(c), 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.
<PAGE>
9.6 Safe harbor rules.
(a) This Section shall apply to a Participant in a profit-sharing plan, and 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: (1) the Participant does not or cannot elect payments
in the form of a life annuity; and (2) on the death of the 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 ninety (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 9.6 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 9.6 is operative, then the provisions of this Article,
other than Section 9.7, shall be inoperative.
(b) The Participant may waive the spousal death benefit described in this
Section at any time provided that no such waiver shall be effective unless it
satisfies the conditions of Section 9.4(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver of
the qualified preretirement survivor annuity.
(c) For purposes of this Section 9.6, 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 9.4(g).
9.7 Transitional Rules.
(a) Any living Participant not receiving benefits on August 23, 1984, who would
otherwise not receive the benefits prescribed by the previous Sections of this
Article must be given the opportunity to elect to have the prior Sections of
this Article apply if such Participant is credited with at least one (1) 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 ten (10) years of
vesting service when he or she separated from service.
<PAGE>
(b) Any living Participant not receiving benefits on August 23, 1984, who was
credited with at least one (1) 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 9.7(d)
of this Article.
(c) The respective opportunities to elect (as described in Section 9.7(a) and
9.7(b) 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.
(d) Any Participant who has elected pursuant to Section 9.7(b) of this Article
and any Participant who does not elect under Section 9.7(a) or who meets the
requirements of Section 9.7(a) except that such Participant does not have at
least ten (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:
(i) 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 six (6) months before the Participant attains
qualified early retirement age and not more than ninety (90) days before the
commencement of benefits. Any election hereunder will be in writing and may be
changed by the Participant at any time.
(ii) 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
<PAGE>
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 ninetieth (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.
(iii) For purposes of this Section 9.7(d):
(1) Qualified early retirement age is the latest of:
(i) the earliest date, under the Plan, on which the Participant may elect to
receive retirement benefits,
(ii) the first day of the one hundred and twentieth (120th) month beginning
before the Participant reaches Normal Retirement Age, or
(iii) 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 9.4(d) of this Article.
9.8 Restrictions on Immediate Distributions.
(a) If the value of a Participant's vested account balance derived from Employer
and Employee contributions exceeds (or at the time of any prior distribution
exceeded) $3,500, and the account balance is immediately distributable, the
Participant and the Participant's spouse (or where either the Participant or the
spouse has died, the survivor) must consent to any distribution of such account
balance. The consent of the Participant and the Participant's spouse shall be
obtained in writing within the ninety (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 account balance 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 thirty (30) days and no more than ninety (90)
days prior to the annuity starting date.
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 account balance is immediately distributable. (Furthermore, if
payment in the form of a qualified joint and survivor annuity is not required
with respect to the Participant pursuant to Section 9.6 of the Plan, only the
Participant need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the
<PAGE>
Participant nor the Participant's spouse shall be required to the extent that a
distributions 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) and if the Employer or
other entity within the same controlled group as the Employer does not maintain
another defined contribution plan (other than an employee stock ownership plan
as defined in Section 4975(e)(7) of the Code), the Participant's account balance
will, without the Participant's consent, be distributed to the Participant.
However, if any entity within the same controlled group as the Employer
maintains another defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code) then the
Participant's account balance will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent to an immediate
distribution.
An account balance is immediately distributable if any part of the account
balance 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 sixty-two (62).
(b) 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 Participant's vested account balance
shall not include amounts attributable to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of the Code.
ARTICLE X. DISTRIBUTION REQUIREMENTS
10.1 General Rules.
(a) Subject to Article IX, Joint and Survivor Annuity Requirements, the
requirements of this Article 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 Article apply to calendar
years beginning after December 31, 1984.
(b) All distributions required under this Article shall be determined and made
in accordance with the proposed regulations under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
10.2 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.
<PAGE>
10.3 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):
(a) the life of the Participant,
(b) the life of the Participant and a designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
Participant, or
(d) a period certain not extending beyond the joint and last survivor expectancy
of the Participant and a designated Beneficiary.
10.4 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:
(a) Individual account.
(i) 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.
(ii) 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 fifty percent (50%) of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant.
(iii) 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 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 regulations. Distributions after the death of the Participant shall
be distributed using the applicable life expectancy in Section 10.4(a)(i) above
as the relevant divisor without regard to proposed regulations Section
1.401(a)(9)-2.
(iv) The minimum distribution required for the Participant's first distribution
calendar year must be made on or before the
<PAGE>
Participant's required beginning date. The minimum distribution for other
calendar years, including the minimum distribution for the distribution calendar
year in which the Participant's required beginning date occurs, must be made on
or before December 31 of that distribution calendar year.
(b) 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 proposed regulations thereunder.
10.5 Death Distribution Provisions.
(a) Distributions 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.
(b) 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 (5th) anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with (i)
or (ii) below:
(i) 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;
(ii) if the designated Beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (i) 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 died and (2) December 31 of
the calendar year in which the Participant would have attained age seventy and
one-half (70 1/2).
If the Participant has not made an election pursuant to this Section 10.5(b) 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, or (2) December 31 of the calendar year which contains the fifth (5th)
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 (5th)
anniversary of the Participant's death.
<PAGE>
(c) For purposes of Section 10.5(b) above, if the surviving spouse dies after
the Participant, but before payments to such spouse begin, the provisions of
Section 10.5(b), with the exception of paragraph (ii) therein, shall be applied
as if the surviving spouse were the Participant.
(d) For Purposes of this Section 10.5, 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.
(e) For the purposes of this Section 10.5, distribution of a Participant's
interest is considered to begin on the Participant's required beginning date
(or, if Section 10.5(c) above is applicable, the date distribution is required
to begin to the surviving spouse pursuant to Section 10.5(b) 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.
10.6 Definitions.
(a) 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 (1) 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.
(b) Designated Beneficiary.
The individual who is designated as the Beneficiary under the Plan in accordance
with Section 401(a)(9) and the proposed regulations thereunder.
(c) 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 10.5 above.
<PAGE>
(d) 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 10.5(b)(ii) 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 for a nonspouse Beneficiary may not
be recalculated.
(e) Participant's benefit.
(i) The account balance as of the last valuation date in the calendar year
immediately preceding the distribution calendar year (valuation 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.
(ii) Exception for second distribution calendar year. For purposes of paragraph
(i) 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.
(f) Required beginning date.
(i) General rule. The required beginning date of a Participant is the first day
of April of the April of the calendar year following the calendar year in which
the Participant attains age seventy and one-half (70 1/2).
(ii) Transitional rules. The required beginning date of a Participant who
attains age seventy and one-half (70 1/2) before January 1, 1988, shall be
determined in accordance with (1) or (2) below:
(1) Non-five (5)-percent owners. The required beginning date of a Participant
who is not a five (5)-percent 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 seventy and one-half (70 1/2) occurs.
(2) Five (5)-percent owners. The required beginning date of a Participant who is
a five(5)-percent 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 seventy and one-half
(70 1/2), or
<PAGE>
(B) the earlier of the calendar year with or within which ends the Plan Year in
which the Participant becomes a five (5)-percent owner, or the calendar year in
which the Participant retires.
The required beginning date of a Participant who is not a five (5)-percent owner
who attains age seventy and one-half (70 1/2) during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
(iii) Five (5)-percent owner. A Participant is treated as a five (5)-percent
owner for purposes of this section if such Participant is a five (5)-percent
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.
(iv) Once distributions have begun to a five (5)-percent owner under this
section, they must continue to be distributed, even if the Participant ceases to
be a five (5)-percent owner in a subsequent year.
10.7 Transitional Rule.
(a) Notwithstanding the other requirements of this Article and subject to the
requirements of Article IX, Joint and Survivor Annuity Requirements,
distribution on behalf of any Participant, including a five (5)-percent owner,
may be made in accordance with all of the following requirements (regardless of
when such distribution commences):
(i) The distribution by the trust (or custodial account) is one which would not
have disqualified such trust (or custodial account) under Section 401(a)(9) of
the Code as in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution designated
by the Participant whose interest in the trust (or custodial account) if being
distributed or, if the Participant is deceased, by a Beneficiary of such
Participant.
(iii) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(iv) The Participant had accrued a benefit under the Plan as of December 31,
1983.
(v) The method of distribution designated by the Participant 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
Participant's death, the
<PAGE>
Beneficiaries of the Participant listed in order of priority.
(b) 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 Participant.
(c) For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, 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 subsections (a)(i) and (v).
(d) If a designation is revoked, any subsequent distribution must satisfy the
requirements of Section 401(a)(9) of the Code and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions are
required to begin, the trust (or custodial account) 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 proposed
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 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 of Section 1.401(a)(9)-1 of the proposed regulations shall apply.
ARTICLE XI. CUSTODIAL ACCOUNT
11.1 All contributions under the Plan shall be paid over to a Custodial Account
to be maintained by the Employer with the Custodian. The Custody Agreement
pursuant to which such Account is maintained shall provide:
(a) That the investment of all funds in such Account (including all earnings)
shall be made solely in one or more First Investors Plans, or stock of one or
more Designated Investment Companies included in the First Investors Group of
Mutual Funds, each of which issues only redeemable stock, the shares of which
are currently offered for sale to the public; or stock of any other Designated
Investment Company, or any combination of the foregoing,
<PAGE>
as specified by the Employer at the time each contribution is made; or, to the
extent permitted by Section 11.4 hereof, insurance policies;
(b) That the shareholder of record of all such stock shall be the Custodian or
its nominee; and
(c) That the assets of the Account will be valued annually at fair market value
as of the last day of the Plan Year.
11.2 The Participants shall be the beneficial owners of all such stock held in
the Custodial Account.
11.3 Based upon information supplied to the Custodian by the Plan Administrator
separate accounts shall be kept for employer contributions for Participants,
voluntary contributions by Participants, transfer of asset contributions and
rollover contributions by Participants. Investment of funds in the Custodial
Account shall be earmarked on behalf of Participants. The Employer shall
purchase investments ratably on behalf of all Participants.
11.4 A portion of the contribution made by the Employer in any Plan Year for any
Participant may, if determined by the Employer, be used to pay premiums on
ordinary or term life insurance policies insuring the life of the Participant;
provided that the amount of the aggregate premium are less than one-half (1/2),
in the case of ordinary life insurance, or one-quarter (1/4), in the case of
term or universal life insurance, of the aggregate of Employer contributions
allocated to the Participant at any particular time. Notwithstanding the
foregoing, the sum of one-half (1/2) of the ordinary life insurance premiums and
all other life insurance premiums shall not exceed one-quarter (1/4) of the
aggregate Employer contributions allocated to any Participant. For purposes of
these incidental insurance provisions, ordinary life insurance contracts are
contracts with both nondecreasing death benefits and nonincreasing premiums.
No such policy may include any provision for an automatic premium loan. The
following restriction shall be made a part of any such policy:
"This policy is not transferable and may not be sold, assigned, discounted or
pledged as collateral for a loan or as security or for any other purpose to any
person other than the issuer of the policy."
Dividends, if any, on such a policy shall be used to reduce the premium payment
on such policy.
11.5 The Custodian shall apply for and will be the owner of any insurance
contract purchased under the terms of this Plan. The insurance contract(s) must
provide that the proceeds will be payable to the Custodian; however, the
Custodian shall be required
<PAGE>
to pay over all proceeds 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 9.4(c) of this Plan. Under no circumstances shall the Custodial
Account 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.
11.6 Subject to Article IX, Joint and Survivor Annuity Requirements, in the
event a Participant is entitled to a distribution of benefits, the entire value
of all life insurance contracts issued on his or her behalf shall be converted
to cash and used to provide benefits or distributed to the Participant upon
commencement of benefits.
ARTICLE XII. AMENDMENT AND TERMINATION
12.1 Each Employer who adopts this Plan delegates to the Sponsor the power to
amend the Plan. The Sponsor shall submit a copy of the amendment to each
Employer and, if applicable, to the Internal Revenue Service. Each Employer
shall be deemed to have consented to any such amendment.
12.2 The Sponsor shall not have the power to amend the Plan in such manner as
would cause or permit any part of the assets in the Custodial Account to be
diverted to purposes other than for the exclusive benefit of Participants or
their portion of such assets to revert to or become the property of the
Employer.
12.3 The Sponsor shall not have the right to modify or amend the Plan
retroactively in such manner as to deprive any Participant, or his or her
Beneficiary, of any benefit to which he or she was entitled under the Plan by
reason of contributions made by the Employer prior to the modification or
amendment, unless such modification or amendment is necessary to conform the
Plan to, or satisfy the conditions of, any law, governmental regulation or
ruling, and to permit the Plan and the Custodial Account to meet the
requirements of Sections 401 and 501(a) of the Code or any similar statute
enacted in lieu thereof.
12.4 If the Employer amends the Plan other than to adopt (i) elective provisions
in the Application/Adoption Agreement, (ii) amendments stated in the
Application/Adoption Agreement which allow the Plan to satisfy Section 415 of
the Code and/or to avoid duplication of minimums under Section 416 of the Code
because of the required aggregation of multiple plans, or (iii) 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, such Employer shall no longer participate in this prototype plan, but
will be considered to have an individually designed plan. An Employer that
amends the Plan to obtain a waiver of the minimum funding requirement under
Section 412(d) of the Code will be considered to have an individually designed
plan.
<PAGE>
12.5 The Plan shall terminate:
(a) If the Employer is dissolved or adjudicated bankrupt or insolvent in
appropriate proceedings, or if a general assignment is made by the Employer for
the benefit of creditors; or
(b) If the Employer should lose its identity by merger, consolidation or
reorganization into one or more corporations or organizations, unless within
sixty (60) days after such merger, consolidation or reorganization such
corporations or organizations elect by an instrument in writing delivered to the
Custodian to continue the Plan and such continuation is approved by the
Custodian.
12.6 In the event of termination, partial termination or complete discontinuance
of contributions hereunder, the account balance of each Participant shall be
fully vested and nonforfeitable. Upon the termination of the Plan, any and all
assets remaining in the Custodial Account, together with any earnings produced
by such assets following such termination, shall be distributed by the Custodian
to the Participants in accordance with amounts credited to their accounts. Such
distribution shall be in cash or kind in one or more of the ways provided by
Section 8.4, as directed by the Employer. Upon the completion of such
distribution, the Custodian shall be relieved from all further liability with
respect to all amounts so paid.
12.7 In the event of any merger or consolidation with, or transfer of assets or
liabilities to any other plan, each Participant shall be entitled to a benefit
after the merger, consolidation or transfer (if the Plan had then terminated)
which is 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).
ARTICLE XIII. LIMITATIONS ON ALLOCATIONS
The provisions of this Article are applicable to limitation years beginning
after December 31, 1986.
13.1 Employers Who Do Not Maintain Other Qualified Plans.
(a) If the Participant does not participate in, and has never participated in
another qualified plan 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, maintained by the employer, which
provides an annual addition as defined in Section 13.5(a), the amount of annual
additions which may be credited to the Participant's account for any limitation
year will not exceed the lesser of the maximum permissible amount or any other
limitation contained in this Plan.
<PAGE>
If the employer contributions that would otherwise be contributed or allocated
to the Participant's 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.
(b) 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.
(c) 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.
(d) If, pursuant to Section 13.1(c) or as a result of the allocation of
forfeitures, there is an excess amount, the excess will be disposed of as
follows:
(i) Any nondeductible voluntary contributions, to the extent they would reduce
the excess amount, will be returned to the Participant;
(ii) If, after the application of paragraph (i), 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 account will be used to reduce employer
contributions (including any allocation of forfeitures) for such Participant in
the next limitation year, and each succeeding limitation year if necessary;
(iii) If, after the application of paragraph (i), an excess amount still exists,
and the Participant is not covered by the Plan at the end of the 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;
(iv) If a suspense account is in existence at any time during a limitation year
pursuant to this Section, it will participate in the allocation of 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 Participant's accounts before any employer or
employee contributions may be made to the Plan for the limitation year. Excess
amounts may not be distributed to Participants or former Participants.
13.2 Employers Who Maintain Other Qualified Master or Prototype Defined
Contribution Plans.
<PAGE>
(a) This Section applies if, in addition to this Plan, the Participant is
covered under another qualified master or prototype defined contribution plan 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)(a)
of the Code, maintained by the employer, which provides an annual addition, as
defined in Section 13.5(a), during any limitation year. The annual additions
which may be credited to a Participant's 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 account under the other plans and
welfare benefit funds for the same limitation year. If the annual additions with
respect to the Participant under other defined contribution plans and welfare
benefit funds maintained by the employer are less than the maximum permissible
amount and the employer contributions that would otherwise be contributed or
allocated to the Participant's 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
defined contribution plans and welfare benefit funds in the aggregate are equal
to or greater than the maximum permissible amount, no amount will be contributed
or allocated to the Participant's account under this Plan for the limitation
year.
(b) 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 13.1(b).
(c) 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.
(d) If, pursuant to Section 13.2(c), above, 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 welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
(e) 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,
(i) the total excess amount allocated as of such date, times
<PAGE>
(ii) the ratio of (1) the annual additions allocated to the Participant for the
limitation year as of such date under this Plan to (2) the total annual
additions allocated to the Participant for the limitation year as of such date
under this and all the other qualified master or prototype defined contribution
plans.
(f) Any excess amount attributed to this Plan will be disposed in the manner
described in Section 13.1(d).
13.3 Employers Who, In Addition To This Plan, Maintain Other Qualified Plans
Which Are Defined Contribution Plans Other Than Master Or Prototype Plans.
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 account under this Plan for
any limitation year will be limited in accordance with Section 13.2 as though
the other plan were a master or prototype plan unless the employer provides
other limitations in the Application/Adoption Agreement.
13.4 Employers Who, In Addition To This Plan, Maintain A Qualified Defined
Benefit Plan.
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 one (1) in any limitation year. The annual additions which may be
credited to the Participant's account under this Plan for any limitation year
will be limited in accordance with the Application/Adoption Agreement.
13.5 Definitions.
For purposes of this Article XIII only, the following definitions and rules of
interpretation shall apply:
(a) "annual additions" - The sum of the following amounts credited to a
Participant's account for the limitation year:
(i) employer contributions;
(ii) forfeitures;
(iii) employee contributions;
(iv) amounts allocated after March 31, 1984, to an individual medical account,
as defined in Section 415(1)(1) 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;
(v) 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
<PAGE>
419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the employer are treated as annual additions
to a defined contribution plan; and
(vi) excess amounts applied, under Sections 13.1(d) or 13.2(f) in the limitation
year to reduce employer contributions will be considered annual additions for
such limitation year.
(b) "compensation" - A Participant's earned income, 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 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, reimbursements and expense allowances), and excluding the following:
(i) 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 to
the extent such contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
(ii) 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;
(iii) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(iv) 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 described in Section 403(b) of the Code (whether or not
the amounts are actually excludable from the gross income of the employee).
For purposes of applying the limitations of this Article XIII, compensation for
a limitation year beginning after December 31, 1991, is the compensation
actually paid or includible in gross income during such year.
Notwithstanding the preceding sentence, compensation for a Participant 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, and contributions made on behalf of such
Participant are nonforfeitable when made.
<PAGE>
(c) "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 one hundred percent (100%) of the dollar
limitation in effect for the limitation year under Sections 415(b)(1)(A) and
415(d) of the Code or one hundred and forty percent (140%) of 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 one hundred
percent (100%) 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.
(d) "defined contribution dollar limitation" - thirty thousand dollars ($30,000)
or, if greater, one-fourth (1/4th) of the defined benefit dollar limitation set
forth in Section 415(b)(1) of the Code as in effect for the limitation year.
(e) "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 voluntary contributions to all
defined benefit plans, whether terminated, maintained by the employer and the
annual additions attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, and individual medical accounts, as defined in
Section 415(l)(2) of the Code, 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 one hundred percent (100%) of the
dollar limitation in effect under Section 415(c)(1)(A) of the Code or
thirty-five percent (35%) of the Participant's compensation for such year.
If the Participant 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
<PAGE>
this fraction will be adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed one (1) 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 one (1) 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 of the plans made after May 5, 1986, but
making 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
employee contributions as annual additions.
(f) "employer" - 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) of the Code), all commonly controlled trades or
businesses (as defined in Section 414(c) of the Code as modified by Section
415(h) of the Code), or affiliated service groups (as defined in Section 414(m)
of the Code) 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.
(g) "excess amount" - The excess of the Participant's annual addition for the
limitation year over the maximum permissible amount.
(h) "highest average compensation" - The average compensation for the three (3)
consecutive years of service with the employer that produces the highest
average. A year of service with the employer is the Plan Year.
(i) "limitation year" - A Plan Year, or the twelve (12)-consecutive month period
elected by the employer in a resolution. All qualified plans maintained by the
employer must use the same limitation year. If the limitation year is amended to
a different twelve (12)-consecutive month period, the new limitation year must
begin on a date within the limitation year in which the amendment is made.
(j) "master or prototype plan" - A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(k) "maximum permissible amount" - The lesser of the defined contribution dollar
limitation or twenty-five percent (25%) of the Participant's compensation for
the limitation year. The compensation limitation referred to in the previous
sentence shall not apply to any contribution for medical benefits (within the
meaning of Section 401(h) or Section 419(f)(2) of the Code) which is otherwise
treated as an annual addition under Sections 415(i)(2) or 419A(d)(2) of the
Code. If a short limitation year is created
<PAGE>
because of an amendment changing the limitation year to a different twelve
(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
- ---------------------------------------------
twelve (12)
(l) "projected annual benefit" - The annual retirement benefit (adjusted to an
actuarial 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:
(i) the Participant will continue employment until normal retirement
age under the plan (or current age, if later), and
(ii) 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.
ARTICLE XIV. MISCELLANEOUS
14.1 Status of Participants.
The Employer hopes and expects to continue the Plan and the payment of
contributions hereunder indefinitely, but such continuance is not assigned as a
contractual obligation except as required by ERISA. Neither the establishment of
the Plan and the Custody Agreement nor any modification thereof, nor the
creation of any fund or account, nor the payment of any benefits, shall be
construed as giving to any Participant or other person any legal or equitable
right against the Employer, or the Custodian, except as provided herein or in
said Custody Agreement or as required by ERISA, nor as modifying or affecting in
any way whatsoever the terms of employment of any Participant.
14.2 Administration of the Plan.
The Plan Administrator shall have all the responsibility for administration set
forth in this Plan and all the responsibility set forth for Plan Administrators
in ERISA.
14.3 Allocation of Charges.
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the assets of the Plan, or the income arising
therefrom, any transfer taxes incurred in connection with the investment and
reinvestment of such assets, all other administrative expenses incurred by the
Custodian in the performance of its duties, including fees for legal services
rendered to the Custodian and the Custodian's compensation, shall be paid and
charged as provided in the Custody Agreement.
<PAGE>
14.4 Condition of Plan and Custody Agreement.
It is a condition of this Plan and Custody Agreement and each Employee by
participating herein expressly agrees that he or she shall look solely to the
assets of the Custodial Account for the payment of any benefit to which he or
she is entitled under the Plan. As provided in ERISA, no prohibited transaction
with a disqualified person or party in interest shall be permitted, except to
the extent allowed therein.
14.5 Inalienability of Benefits.
The benefits provided hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution or levy, and any attempt to cause such
benefits to be so subjected shall not be recognized except to such extent as may
be required by law. 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, or any domestic relations order entered before January 1,
1985.
14.6 Necessity of Qualification.
The Plan and Custody Agreement are established with the intent that they shall
qualify under Section 401 and Section 510(a) of the Internal Revenue Code, as
amended. If the Employer's plan fails to attain or retain qualification, such
plan will no longer participate in this prototype Plan and will be considered an
individually designed plan. If the Employer's plan fails to attain or retain
qualification, the funds of such plan will be removed from the Custodial Account
as soon as adimistratively feasible.
14.7 Predecessor Employers.
If the Employer maintains the plan of a predecessor employer, service with such
predecessor employer will be treated as service for the Employer to the extent
required by Section 414(a) of the Code.
14.8 Aggregation Rules.
(a) 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 this and all other
trades or businesses.
(b) 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
<PAGE>
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.
(c) If an individual is covered as an Owner-Employee under the plans of two (2)
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 trades or businesses which are 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.
(d) For purposes of paragraphs (a), (b) and (c), an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two (2) or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or business, or
(ii) in the case of a partnership, own more than fifty percent (50%) of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two (2) or more
Owner-Employees shall be treated as owning an interest in a partnership which is
owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two (2) or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
14.9 Exclusive Benefit.
The corpus or income of the Custodial Account may not be diverted to or used for
other than the exclusive benefit of the Participants or their Beneficiaries,
except under the following conditions:
(a) Any contribution made by the Employer because of a mistake of fact must be
returned to the Employer within one year of contribution.
(b) In the event that the Commissioner of Internal Revenue determines that the
Plan is not initially qualified under the Internal Revenue Code, any
contribution 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.
(c) If the Employer conditions a contribution to the Plan on its deductibility
under Section 404 of the Code, then, to the extent the deduction is disallowed,
the contribution shall be returned to the Employer within one year after the
disallowance of the deduction.
<PAGE>
14.10 Governing Law.
This Plan and the Custody Agreement shall be construed, administered and
enforced according to the laws of the State of New York, except as superseded by
Federal law.
FIRST INVESTORS CORPORATION CUSTODY AGREEMENT
FOR
PROFIT SHARING/MONEY PURCHASE PENSION RETIREMENT PLAN
First Financial Savings Bank, S.L.A.
Dear Sirs:
The Employer, engaged in the business shown in the Application/Adoption
Agreement filed in conjunction herewith (the "Employer"), has established a
Retirement Plan ("Plan") (a copy of which is attached hereto as Exhibit "A") for
the benefit of the participants therein (the "Participants"), intended to
qualify under Section 401 of the Internal Revenue Code of 1986, as amended,
("Code"). As part of the Plan, the Employer hereby requests First Financial
Savings Bank, S.L.A. (the "Custodian") to establish a Custodial Account for the
investment of contributions under the Plan in one or more of the following, to
wit, shares of First Investors Series Fund, First Investors High Yield Fund,
Inc., First Investors Fund for Income, Inc., First Investors Global Fund, Inc.,
First Investors Cash Management Fund, Inc., and First Investors Government Fund,
Inc. (all of which are regulated investment companies which issue only
redeemable stock), shares of any other regulated investment company which issues
only redeemable stock and which is underwritten, distributed or sponsored by
First Investors Corporation, First Investors Plans (as described in said Plans,
and hereinafter called "FIC Plans"), and policies of life insurance (sometimes
hereinafter collectively called the "Investments"), upon the terms and
conditions set forth in this Agreement, and this Agreement shall by appropriate
signatures on the said application be deemed to have been subscribed by the
Employer and accepted by the Custodian.
SECTION 1. ESTABLISHMENT OF CUSTODIAL AND PARTICIPANTS' ACCOUNTS
(a) The Custodian shall open and maintain a Custodial Account and, as part
thereof, Participants' accounts for such individuals as the Employer shall from
time to time certify to it as Participants in the Plan. The Participants as of
the effective date of this Agreement are set forth in a schedule attached to the
said Application/Adoption Agreement.
(b) The Employer agrees to submit the Plan promptly to the
<PAGE>
appropriate District Director of Internal Revenue for his approval and to
furnish the Custodian with a copy of its letter of approval promptly after the
receipt thereof or to promptly notify the Custodian if the Plan is disapproved.
If disapproved, then, unless the Plan shall be amended in such manner as shall
be required by the Internal Revenue Service, the Custodian shall terminate this
Agreement and distribute all assets to the Participants or the Employer, as the
Employer directs. This Section 1(b) is not applicable if the Employer has
reliance on the Sponsor's opinion letter for this Plan in accordance with
Section 6 of Internal Revenue Service Revenue Procedure 89-9.
SECTION 2. RECEIPT OF CONTRIBUTIONS
(a) The Custodian shall accept and hold in the Custodial Account such
contributions of money on behalf of the Employer and 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
Participants' accounts to which they are to be credited.
(b) In addition, the Custodian may, in its discretion, accept cash and/or shares
transferred to it from any other FIC Plan which is maintained by the Employer
for the benefit of any of the Participants if the Custodian has received an
opinion of counsel that such other plan satisfies the applicable requirements of
Section 401(a) of the Code. It shall hold the shares, if any, and the cash for
investment in accordance with the provisions of this Section, and shall, in
accordance with the written instructions of the Employer, make appropriate
credits to the accounts of the Participants for whose benefit a contribution has
been made. Any amounts so credited as contributions previously made by the
Employer or by such Participants under such other plan, as specified by the
Employer, shall be treated as contributions previously made under the Plan by
the Employer or by such Participants, as the case may be.
(c) Subject to the approval of the Plan Administrator, the Custodian shall
accept a direct transfer of assets from the trustee or custodian of any other
qualified plan described in Section 401(a) of the Code or from a qualified
annuity plan described in Section 403(a) of the Code, or a rollover contribution
within the meaning of Section 402(a)(5) of the Code, to be held for the benefit
of any Participant to the full extent permitted by the Code. Any such transfer
of assets or rollover on behalf of a Participant shall be separately accounted
for and invested in accordance with Section 3 hereof. In the event that the
transferred or rollover amounts include assets other than cash and/or Designated
Investment Company Shares, the Custodian shall dispose of said other assets and
invest the proceeds in accordance with Section 3 hereof.
<PAGE>
SECTION 3. INVESTMENT OF ACCOUNT ASSETS
The amount of each contribution credited to a Participant's account shall be
promptly applied, after authorized deductions, if any, under the Plan, to the
purchase of investments as directed by the Employer.
All dividends and capital gain distributions received on the shares held in each
Participant's account shall (unless received in additional shares of the
particular mutual fund concerned, after authorized deductions, if any) be
reinvested in such shares, which shall be credited to such account.
If any distribution on any shares in any Participant's account may be received
at the election of the shareholder in additional shares or in cash or other
property, the Custodian shall elect to receive it in additional shares, which
shall be credited to such account.
FIC Plan sales charges shall be charged to the Account of the Participant for
whom shares are acquired.
All Investments acquired by the Custodian shall be registered in the name of the
Custodian or of its registered nominee as defined in the Code and any
regulations of the Treasury Department issued thereunder exempting such
transaction from liability for stock transfer taxes.
Wherever applicable, "shares" shall also mean the shares held through and under
the respective FIC Plans held by the Custodian. The shares held under any FIC
Plans held by the Custodian shall be deemed to be held in each Participant's
account in proportion to his or her interest in the Plan.
SECTION 4. DISTRIBUTIONS FROM THE CUSTODIAL ACCOUNT
On receipt of a written request from the Employer certifying that a
Participant's benefit is payable pursuant to the Plan, the Custodian shall,
after deduction of any applicable charges, including transfer taxes, withdraw
from the applicable FIC Plan or Plans and transfer all shares or Plans credited
to such Participant's account (or such lesser number as the Employer may so
request) into the name of such Participant or his or her designated beneficiary
under the Plan and distribute such shares and Plans (together with all current
earnings and any cash credited to his or her Account) to the transferee.
If any request for payment of a benefit so provides, the Custodian shall pay the
same by withdrawing and selling or redeeming all shares credited to such
Participant's account (or such lesser number as the Employer may so request) and
distribute an annuity contract purchased with the redemption proceeds from an
insurance company designated by the Employer, or distribute the redemption
proceeds (together with all current earnings and any cash credited to his or her
account) in cash to such Participant or his or her designated beneficiary under
the Plan either in a lump sum or in installments, as provided in the Plan
(provided that in the case of
<PAGE>
installment distributions, the Custodian shall redeem only the shares necessary
to make each of the installment payments).
SECTION 5. VOTING AND OTHER ACTION
The Custodian shall not vote any of the shares except in accordance with the
written instructions of the Participant, or if the Investment is a FIC Plan or
Plans, in accordance with the terms and conditions thereof. The Custodian shall
deliver, or cause to be delivered, to the Participants, in care of the Employer,
a sufficient number of notices of any meetings at which the shares may be voted,
related proxy material, together with the voting instruction forms required by
the applicable FIC Plan Certificate so that voting instructions may be given by
the Participants if so desired.
SECTION 6. REPORTS OF THE CUSTODIAN AND EMPLOYER
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions hereunder. Not later than
forty-five (45) days after the close of each calendar year (or after the
Custodian's resignation or removal pursuant to Section 10 hereof), the Custodian
shall file with the Employer a written report or reports reflecting the
receipts, disbursements and other transactions effected by it during such year
(or period ending with such resignation or removal) and the assets and
liabilities of the Custodial Account at its close. The assets of the Custodial
Account shall be valued annually at fair market value on the last day of the
Plan Year. Such report or reports shall be open to inspection by any Participant
for a period of sixty (60) days immediately following the date on which it is
filed with the Employer. Upon the expiration of such sixty (60)-day period, the
Custodian shall be forever released and discharged from all liability and
accountability to anyone with respect to its acts, transactions, duties,
obligations or responsibilities as shown in or reflected by such report, except
with respect to any such acts or transactions as to which the Employer shall
have filed written objections with the Custodian within such sixty (60)-day
period.
The Employer shall furnish to the Custodian, and the Custodian shall furnish to
the Employer, such information relevant to the Plan and Custodial Account as may
be required under the Code and any regulations issued or forms adopted by the
Treasury Department thereunder.
The Custodian shall keep such records, make such identifications, and file with
the Internal Revenue Service such returns and other information concerning the
Custodial Accounts as may be required of it under the Code and any regulations
issued or forms adopted by the Treasury Department thereunder.
<PAGE>
SECTION 7. CUSTODIAN'S FEE AND EXPENSES OF THE ACCOUNT
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the Custodial Account shall be paid from the
assets of the Account and shall, unless allocable to the accounts of specific
Participants, be charged proportionately to their respective accounts. Any
transfer taxes incurred in connection with the investment and reinvestment of
the assets of the Custodial Account, all other administrative expenses incurred
by the Custodian in the performance of its duties including fees for legal
services rendered to the Custodian, and such compensation to the Custodian as
may be agreed upon from time to time between the Custodian and First Investors
Corporation shall be paid by the Employer, but until paid shall constitute a
charge upon the assets of the Custodial Account.
SECTION 8. CONCERNING THE CUSTODIAN
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 at the Employer's request. The Employer shall at all times fully indemnify
and hold harmless the Custodian, its successors and assigns, from any liability
arising from distributions so made or actions so taken, and from any and all
other liability whatsoever which may arise in connection with this Agreement,
except liability arising from the negligence or willful misconduct of the
Custodian. The 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; or 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 may rely upon
and act upon any writing from the person signing the Application or from any
other person authorized by the Employer to give instructions concerning the
Plan. The previous sentence notwithstanding, the Custodian shall be protected in
acting upon any written order 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, and, so long as it acts in good faith, in
taking or omitting to take any other action.
No amendment to the Plan shall place any greater burden on the Custodian without
its written consent.
The Custodian may employ an agent to receive contributions to the Plan and to do
any and all administrative acts relating to the Plan as the Custodian may do
through an agent.
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 Account
by virtue of this Agreement or the Plan.
<PAGE>
SECTION 9. AMENDMENT
First Investors Corporation and its successor or successors reserves the right
to amend this Agreement in any respect on at least thirty (30) days' notice in
writing to the Custodian; provided, however, that the Custodian's consent shall
be required if its duties are increased by such amendment. First Investors
Corporation shall submit a copy of any amendment of this Agreement to the
Employer.
SECTION 10. RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign at any time upon thirty (30) days' notice in writing to
the Employer, and may be removed by the Employer or by First Investors
Corporation at any time upon thirty (30) days' notice in writing to the
Custodian. Upon such resignation or removal, the Employer or First Investors
Corporation shall appoint a successor custodian or trustee. Upon receipt by the
Custodian of written acceptance of such appointment by the successor custodian
or trustee, 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 or such number of
shares as it may deem advisable for payment of all of 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 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 thirty (30) days after the Custodian's resignation or removal the
Employer or First Investors Corporation has not appointed a successor custodian
or trustee 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
such successor whether or not it makes such appointment itself.
SECTION 11. TERMINATION OF ACCOUNT
The Custodian may elect to terminate the Custodial Account if within thirty (30)
days after its resignation or removal pursuant to Section 10, the Employer or
First Investors Corporation has not appointed a successor custodian or trustee
which has accepted such appointment. This Agreement shall terminate: (a) if the
Employer is dissolved or adjudicated as bankrupt or insolvent in appropriate
proceedings or if a general assignment is made by the Employer for the benefit
of creditors; or (b) if the Employer should lose its identity by merger,
consolidation or reorganization into one or more corporations or organizations,
unless within sixty (60) days after such merger, reorganization or
consolidation, such corporations or organizations elect by an instrument in
writing delivered to the Custodian to continue the Plan and this Agreement
<PAGE>
and such continuation is approved by the Custodian. Termination of the Custodial
Account shall be effected by distributing all assets thereof to the Participants
and their designated beneficiaries pursuant to the direction of the Employer (or
in the absence of such direction, as determined by the Custodian), as on the
termination of the Plan.
Except as otherwise provided in the next paragraph, if the Custodian terminates
the Custodial Account as provided herein, all distributions shall be made in
accordance with the provisions of the Plan, or if a successor custodian or
trustee is appointed and has accepted such appointment, the Custodial Account
will be transferred to such successor custodian or trustee in accordance with
said provisions.
If the Custodian receives written notice that the Internal Revenue Service has
determined that the Plan fails to qualify under Section 401 of the Code, as it
existed at the time the Plan was adopted, by reason of some inadequacy in the
original Plan not removed by a retroactive amendment pursuant to Section 401(b)
thereof or for any other reason, the Custodian shall terminate the Custodial
Account by distributing the assets thereof equitably among the Employer and the
Participants in proportion to their contributions.
Upon termination of the Custodial Account in any manner provided for in this
Section and in Section 10, the Custodian shall be relieved from all further
liability with respect to this Agreement, the Custodial Account and all assets
thereof so distributed, and any determinations by the Custodian of the mode of
distributing the assets of the Custodial Account.
SECTION 12. MISCELLANEOUS
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 except as specifically provided
in this Agreement.
Any notice from the Custodian to the Employer provided for in this Agreement
shall be effective if sent by post paid first class mail to the Employer at its
last address of record.
In the event of any conflict between the provisions of the Plan and those of
this Agreement, the former shall prevail.
This Agreement shall be construed in accordance with the laws of the State of
New York, except to the extent superseded by federal law.
The assets of the Custodial Account shall not be subject to alienation,
assignment, trustee process, garnishment, attachment, execution or levy of any
kind except for a qualified domestic relations order within the meaning of
Section 414(p) of the Code, and except by the Custodian for its fees and
expenses of the
<PAGE>
Custodial Account, and no attempt to cause such assets to be so subjected shall
be recognized except to such extent as may be required by law or provided for
herein.
SECTION 13. PROHIBITED TRANSACTIONS
No prohibited transaction with a disqualified person or party in interest as
defined in Section 4975 of the Code or Section 406 or 407 of the Employee
Retirement Income Security Act of 1974 ("ERISA") shall be permitted, except to
the extent allowed by Section 4975 of the Code or Section 408 of ERISA, or by
administrative exemptions granted under any of such Sections.
INTERNAL REVENUE SERVICE
Plan Description: Prototype Standardized Money Purchase Pension Plan
FFN: 50222020001-02 Case: 9011447 EIN: 13-2608328
BPD: 01 Plan: 002 Letter Serial No: D257900a
Department of Treasury
Washington, DC 20224
Person to Contact: Mr. Dua
Telephone Number: (212) 566-4708
Refer Reply to: E:EP:Q:3
Date: 05/01/91
First Investors Corp
120 Wall Street
New York, NY 10005
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 officers, owners, or 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.
<PAGE>
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, 1989-6 I.R.B. 14; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419A(d)(3). In such situations, the employer should request a
determination 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.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor'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,
/s/John Swain
Chief, Employee Plans Qualifications Branch
<PAGE>
INTERNAL REVENUE SERVICE
Plan Description: Prototype Standardized Profit Sharing Plan
FFN: 50222020001-001 Case: 9011446 EIN: 13-2608328
BPD: 01 Plan: 001 Letter Serial No: D257899a
Department of Treasury
Washington, DC 20224
Person to Contact: Mr. Dua
Telephone Number: (212) 566-4708
Refer Reply to: E:EP:Q:3
Date: 05/01/91
First Investors Corp
120 Wall Street
New York, NY 10005
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 officers, owners, or 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, 1989-6 I.R.B. 14; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419A(d)(3). In such situations, the employer should request a
determination 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.
<PAGE>
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor'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,
/s/John Swain
Chief, Employee Plans Qualifications Branch
DISCLOSURE STATEMENT INDIVIDUAL RETIREMENT ACCOUNT
1. INTRODUCTION
This Disclosure Statement is distributed to you in accordance with Internal
Revenue Service regulations and is intended to provide you with a concise
explanation of the rules applicable to your Individual Retirement Account (IRA).
WE URGE YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY PRIOR TO ESTABLISHING AN
IRA. Due to the unfavorable tax consequences which may result from the improper
establishment of an IRA, you may wish to confer with your attorney or other
qualified tax advisor if you would like specific advice regarding your IRA. In
addition, further information can be obtained from any district office of the
Internal Revenue Service. The Tax Reform Act of 1986 (TRA) enacted many changes
to the rules governing IRAs. This Disclosure Statement contains a general
explanation of the TRA changes, which are generally effective for tax years
beginning after 1986. Because the Internal Revenue Service has not issued final
regulations with respect to some of the TRA changes or with respect to certain
other statutory provisions, First Investors Corporation reserves the right to
amend the IRA governing instruments and this Disclosure Statement to comply with
any such subsequently issued regulations or applicable laws. The following is a
discussion of the statutory requirements and tax rules governing IRAs.
Additional information can be found in I.R.S. Publication 590, "Individual
Retirement Arrangements".
2. REVOCATION PROCEDURE
If your IRA is established on the date you receive this disclosure Statement, or
within seven (7) days thereafter, you may revoke your IRA, for any reason and
without penalty, within seven (7) days after it is established. If your IRA is
established more than seven (7) days after the date you receive this Disclosure
Statement, it may not be revoked. If you should choose to revoke your IRA, the
entire amount of your contribution will be refunded without adjustment for
administrative expenses or any other amount. In order to revoke your IRA, you
must mail or deliver a written notice of revocation to :
First Investors c/o Administrative Data Management Corp.
Attn: ADM Services Department
581 Main Street Woodbridge, New Jersey 07095-1198
<PAGE>
If mailed, the revocation notice shall be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at
1-800-423-4026 if you have any questions with respect to this procedure.
Generally, your initial contribution is invested in fund shares on the date of
receipt; however, in the case of a large contribution, Administrative Data
Management Corp. reserves the right not to invest such contribution in fund
shares until the 7th day after it is received.
3. IRA REQUIREMENTS
An Individual Retirement Account is a trust created or organized in the United
States for the exclusive benefit of an individual or his or her beneficiaries.
The written instrument creating the trust must satisfy the following
requirements:
1. Except in the case of SIMPLE-IRAs, SEPs, and SARSEPs, rollover contribution
and trustee to trustee transfer (explained below), contributions must be in cash
and may not exceed $2,000 on behalf of any individual;
2. The trustee must be a bank or such other person as approved by the Secretary
of the Treasury;
3. No part of the trust funds may be invested in life insurance contracts;
4. The interest of an individual in an IRA must be nonforfeitable;
5. The assets of the trust may not be commingled with other property except in a
common trust fund or common investment fund; and
6. IRAs must be distributed in accordance with certain rules (explained below).
Your First Investors IRA is a custodial account which is treated as a trust for
these purposes under the Federal tax laws.
4. ELIGIBILITY
You are eligible to establish an IRA for any year in which you work and receive
compensation for such work, provided that you have not attained age 70 1/2 in
the year in question. If eligible, both a husband and wife may each have their
own separate IRA. If either spouse is ineligible to establish an IRA, the other
spouse may be permitted to establish a Spousal IRA.
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<PAGE>
"Compensation" includes wages, salaries, professional fees, and other amounts
received for personal services actually rendered, including such items as
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses.
Compensation also includes earned income of a self-employed person and any
amount includable in an individual's income as alimony or separate maintenance
payments. Compensation does not include amounts derived from or received as
earnings or profits from property, such as interest, dividends and rent, or any
amount not includable in gross income.
You may have an IRA whether or not you are a participant in any other retirement
plan. However, if you or your spouse are an active participant in another
retirement plan the amount of your annual contribution which is tax deductible
may be reduced. Please refer to Section 5 for assistance in determining the tax
deductible amount of your annual contribution.
5. CONTRIBUTIONS
A. Deductible Contributions
You may make an annual contribution to your IRA up to a maximum of $2,000 (or
effective for taxable years beginning in 1997, $4,000 for a regular and Spousal
IRA) or 100% of your compensation, whichever is less. If neither you nor your
spouse is an "active participant" in an employer maintained retirement plan at
any time during the year, the entire amount of your contribution will be tax
deductible. If either you or your spouse is an active participant in an employer
maintained retirement plan, but you have adjusted gross income (AGI) below a
certain level (explained below), your entire contribution will be tax
deductible. However, if either you or your spouse is an active participant and
your AGI is above the applicable dollar level, the amount of your contribution
which is tax deductible may be reduced or eliminated.
An exception applies in the case of a husband and wife who lived apart at all
times during the year and filed separate tax returns for the year: they are
treated as not married for the year for purposes of the active participation
rules.
3
<PAGE>
In order to be deductible for a taxable year, annual contributions must be made
not later than the due date (without regard to extensions) of your tax return
for the year for which the deduction is claimed. Annual contributions may be
made in one or more payments, by check or money order payable to First Investors
Corporation. The minimum payment which may be made is the minimum amount
required for investment in the fund shares which you select for investment of
your contributions. The money earned on your investment will be automatically
reinvested, and is not taxable to you until the year in which you actually
receive it.
You are an "active participant" for a year if you are covered by any of the
following retirement plans:
1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");
2. An annuity plan described in Section 403(a) of the Code;
3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);
4. An annuity contract or custodial account described in Section 403(b) of the
Code;
5. A simplified employee pension (SEP) described in Section 408(k) of the Code;
6. A trust described in Section 501(c)(18) of the Code.
7. A SIMPLE-IRA described in Section 408(p) of the Code.
You are covered by a retirement plan for a year if your employer or union has a
retirement plan under which money is added to your account or you are eligible
to earn retirement credits. You are an active participant for a year even if you
are not yet vested in your retirement benefit. Also, if you make required
contributions or voluntary employee contributions to a retirement plan, you are
an active participant. In certain plans, you may be an active participant even
if you were only employed for part of the year. Starting with the 1987 tax year,
your Form W-2 should indicate your active participant status.
You are not considered an active participant if you are covered by a plan only
because of your service as (1) an Armed Forces Reservist, for less than 90 days
of active service; or (2) a volunteer fire fighter covered for fire fighting
service by a government plan, and your accrued benefit under such plan as of the
beginning of the year is not more than an annuity of $1,800 per year payable at
age 65. Of course, if you are covered by any other plan, these exceptions do not
apply.
4
<PAGE>
If you would like specific advice as to whether you are an active participant in
a retirement plan, you should consult with your attorney or other qualified tax
advisor.
If you or your spouse is an active participant, you must calculate your adjusted
gross income (AGI) for the year (if you and your spouse file a joint tax return,
you must use your combined AGI) to determine whether your IRA contribution will
be deductible.
Your tax return will show you how to calculate your AGI for this purpose. If
your AGI is at or below a certain level, called the "Threshold Level," you are
treated as if you were not an active participant and you can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are single (or married but treated as single under the exception
described above), your AGI Threshold Level is $25,000. If you are married and
file a joint tax return the Threshold Level is $40,000. If you are married but
file a separate tax return, the Threshold Level is $0.
If your AGI is less than $10,000 above your Threshold Level, you will still be
able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level is called your Excess AGI.
The maximum allowable deduction is $2,000 (or $4,000 for a regular and Spousal
IRA). You may calculate your deduction limit by using the following formula:
$10,000 - Excess AGI x Maximum Allowable = Deduction
- -------------------- Deduction Limit
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in 0). For example, if the result is $1,525, you must round it
up to $1,530. If the final result is below $200 but over 0, your deduction limit
is $200. Your deduction limit cannot, in any event, exceed 100% of your
compensation.
The following examples illustrate the above formula.
5
<PAGE>
Example One: Mr. Smith, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. He has contributed $2,000 to
his IRA for the current year. Mr. Smith wishes to calculate the deductible
portion of his IRA contribution. He must first determine the amount of his
Excess AGI. Excess AGI is equal to AGI minus the Threshold Level. Since Mr.
Smith is a single individual his Threshold Level is $25,000. Thus, his Excess
AGI is $3,000 ($28,000-$25,000). Mr. Smith will determine his deduction limit as
follows:
$10,000 - $3,000 x $2,000 = $1,400
- ----------------
$10,000
Example Two: Mr. and Mrs. Jones are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Mr. Jones is not covered by any other
retirement plan. Mrs. Jones is an active participant in her employer's
retirement plan. Mr. and Mrs. Jones have each contributed $2,000 to their
separate IRAs. The maximum allowable deduction for each spouse is $2,000. Mr.
and Mrs. Jones wish to calculate the deductible portion of their IRA
contributions. Mr. and Mrs. Jones must first determine the amount of their
Excess AGI. Since they are a married couple filing a joint return the Threshold
Level is $40,000. Thus, their Excess AGI is $5,000 ($45,000-$40,000). Mr. and
Mrs. Jones will each determine their individual deduction limit as follows:
$10,000 - $5,000 x $2,000 = $1,000
- ----------------
$10,000
Mr. and Mrs. Jones will therefore be able to claim a total deduction of $2,000
on their joint income tax return.
B. Non-Deductible Contributions
Even if your deduction is less than $2,000 ($4,000 for a regular and Spousal
IRA), you may still contribute to an IRA up to the lesser of 100% of your
compensation or $2,000 ($2,250 for a Spousal IRA). The amount of your
contribution which is not deductible will be treated as a non-deductible
contribution to your IRA. You may also choose to treat a contribution as
non-deductible even if you could have deducted part or all of the contribution.
Interest or other earnings on your IRA contribution, whether from deductible or
non-deductible contributions, will not be taxed until distributed to you from
the IRA.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your individual income tax return, you must then determine how much of your
contribution is deductible. If you determine that all or a portion of your
contribution is non-deductible, you must report such amount to the IRS on Form
8606 as part of your tax return for the year. If you fail to file Form 8606, you
may be subject to a penalty of $50. If you overstate the amount of the
non-deductible contribution, you may be subject to a penalty of $100.
6
<PAGE>
C. Spousal IRA Contributions
If you and your spouse file a joint income tax return and your spouse either has
no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make IRA contributions on behalf of yourself and your spouse
for tax years beginning in 1997, the aggregate amount of the contributions to
both your IRA and your spouse's IRA may not exceed the lesser of $4,000 or the
amount of your compensation for such year. The contribution does not have to be
split equally between the IRAs belonging to you and your spouse. However, the
total contributions to either of your IRAs may not exceed $2,000.
If you are unable to make contributions to your IRA because you have attained
age 70 1/2, you may nevertheless continue to make contributions to your
non-working spouse's IRA until the year in which your spouse reaches age 70 1/2.
To establish a spousal IRA, submit a separate IRA Application for your spouse.
D. Excess Contributions
If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever is applicable, such amount is an "excess
contribution." A non-deductible 6% excise tax is imposed upon such excess
contribution for the year in which it is made and also for each following year
until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the date for filing your federal income tax
return for the year for which the excess contribution is made. The earnings
attributable to the excess contribution must also be withdrawn and must be
included in your gross income in the year for which the excess contribution was
made. A timely withdrawal of the excess contributions will permit you to avoid
not only the 6% excise tax but also the 10% penalty tax on premature
distributions. A withdrawal of an excess contribution after the tax return
filing date will avoid the 10% penalty tax on premature distributions, provided
that the total contribution for the year did not exceed $2,250 and no deduction
was allowed for the excess contribution.
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<PAGE>
As an alternative to withdrawing such excess contribution, you may eliminate
such excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise tax
until the excess contribution is completely eliminated.
E. SEP-IRA and SIMPLE-IRA Contributions
If your IRA is part of a Simplified Employee Pension (SEP-IRA)or a Savings
Incentive Match Plan for Employees of Small Employers (SIMPLE-IRA) established
by your employer (or by you if you are self-employed), the maximum amount which
may be contributed on your behalf may be greater than the general maximum IRA
limitations on contributions, described above.
The maximum amount which may be contributed on your behalf to a SEP-IRA is the
lesser of (i) 15% of your compensation for the year (if you are self-employed,
your "earned income" after taking into account the SEP-IRA contribution and tax
deduction allowed under Internal Revenue Code Section 164(f) or (ii) $30,000. In
addition, your employer may establish a type of SEP-IRA (a "SARSEP") which would
allow you to make elective contributions to your IRA of up to $7,000 per year,
subject to the same 15% and $30,000 limits. (The $7,000 limit is adjusted by the
Internal Revenue Service for years after 1987.)
Amounts contributed to a SEP-IRA or a SIMPLE-IRA within the above limits are
excluded from your income for Federal income tax purposes until such amounts are
distributed to you. Amounts distributed to you from a SEP-IRA are taxed in the
same manner as distributions from other IRAs.
An amount withdrwn from the SIMPLE-IRA is generally includible in gross
income. However, a SIMPLE-IRA balance may be rolled over or transferred on a
tax-free basis to another IRA designed solely to hold funds under a SIMPLE plan.
In addition, an individual may roll over or transfer his or her SIMPLE-IRA
balance to any IRA on a tax-free basis after a two year period has expired since
the individual first participated in the SIMPLE plan.
Any rollover or transfer must comply with the requirements under section 408.
If an individual withdraws an amount from a SIMPLE-IRA during the two year
period beginning when the individual first participated in a SIMPLE plan and the
amount is subject to the additional tax on early distributions under section
72(t), this additional tax is increased from 10% to 25%.
8
<PAGE>
If you are a participant in a SEP-IRA or SIMPLE-IRA, your employer is required
to give you a copy of the SEP-IRA/SIMPLE-IRA documents, including certain
explanatory material concerning the Federal income tax rules for SEP-IRAs, and
inform you each year of the amounts (if any) contributed on your behalf.
To establish a SEP-IRA, the employer should complete and submit Form 5305-SEP,
and Schedule A, contained within the First Investors SEP-IRA/SARSEP-IRA
Retirement Plan documents. To establish a SARSEP-IRA, the employer should
complete and submit Form 5305-SEP, and Schedule B, contained within the
SEP-IRA/SARSEP-IRA Retirement Plan documents.
To establish a SIMPLE-IRA, the employer should complete and submit Form
5305-SIMPLE, and Schedule A, contained within the First Investors SIMPLE-IRA
Retirement Plan documents.
F. Rollover IRA
You can establish a rollover IRA sccount with proceeds from the distribution
from another IRA you maintain. Only one IRA to IRA rollover can be made from an
IRA each year. A separate account for your IRA rollover will not be established
unless you so instruct us in writing. Please submit a letter of instruction, and
if you are establishing a new IRA account, a First Investors IRA Application.
G. Direct Transfer IRA
You can establish a rollover IRA account by having another IRA you maintain
directly transferred by the current custodian to First Investors. An unlimited
number of direct transfers of IRA accounts may be made each year. A separate
account for your transferred IRA will not be established unless you so instruct
us in writing. Please submit a letter of instruciton, First Investors IRA
Transfer Form, and if you are establishing a new IRA account, a First Investors
IRA Application.
H. Qualified Plan Rollover IRA
You can establish a rollover IRA account to hold the proceeds from a
distribution from an employer's qualified retirement plan. By making a "direct
rollover" from the plan to a First Investors IRA, you avoid income tax, any
penalty on pre-59 1/2 withdrawals, and 20% federal income tax withholding.
Please consult with your tax advisor as to whether your qualified plan rollover
IRA should be established as a separate IRA. A separate account for your
qualified plan rollover will not be established unless you so instruct us in
writing. Please submit a letter of instruction, First Investors IRA Transfer
Form, and if you are establishing a new IRA account, a First Investors IRA
Application.
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<PAGE>
6. ROLLOVER CONTRIBUTIONS
A rollover is a tax free transfer of cash or other assets from one retirement
program to another. There are two types of rollover contributions to an IRA. The
first type involves the transfer from one IRA to another IRA. The second type
involves the transfer of assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan to an IRA. A rollover contribution
is neither includible in your income nor deductible. Unlike annual
contributions, rollover contributions are not subject to the yearly $2,000 (or
$2,250 in the case of the Spousal IRA) or 100% of compensation limitation.
A. IRA to IRA Rollover and Trustee to Trustee Transfer
In order to qualify for tax-free treatment you must make a rollover contribution
from one IRA to another IRA within 60 days after you receive the distribution
from the first IRA. In addition, if the assets distributed from your IRA are
property other than cash, the identical property must be contributed to your new
IRA in order to qualify as a rollover contribution. 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. Amounts not rolled over may also be
subject to the 10% penalty tax on premature distributions.
Rollovers between IRAs are allowed only once a year. The one year period begins
on the date that you receive the IRA distribution and not on the date it is
rolled over into another IRA. A rollover from one IRA to another should not be
confused with a transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee (trustee to trustee transfer). This is not
considered a rollover and, consequently, is not affected by the limitation on
rollovers to once a year.
In order to qualify for tax-free treatment, it is not necessary to rollover the
entire amount of the distribution which you receive. It is permissible for you
to rollover a portion of the distribution and to keep the remainder. However,
the amount you retain will be taxed in the year of receipt as ordinary income.
In addition, the amount retained may be subject to the 10% tax on premature
distributions.
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<PAGE>
B. Retirement Plan to IRA Rollover
You may also be eligible for tax-free rollover treatment when you receive a
distribution from a tax-sheltered annuity or custodial account or from your
employer's qualified retirement plan. For retirement plan distributions paid to
you before January 1, 1993, in order to qualify for tax-free rollover treatment
a distribution from a qualified retirement plan must constitute either a
"qualified total distribution" or "partial distribution".
A "qualified total distribution" means one or more distributions:
(i) which are paid to you within a single taxable year on account of the
termination of your employer's qualified plan, or in the case of a profit
sharing or stock bonus plan, a complete discontinuance of contributions;
(ii) which constitute a "lump sum distribution" within the meaning of the
Internal Revenue Code; or;
(iii) which constitute a distribution of your accumulated deductible employee
contributions.
In order for a qualified total distribution to be eligible for tax-free rollover
treatment, such distribution must be transferred to an IRA within 60 days of
when you receive it. In addition, if such distribution consists of property
other than money, the identical property must be transferred to your IRA in
order to qualify as a rollover contribution. However, you are permitted to sell
the property and transfer the proceeds of the sale to the IRA within 60 days of
receipt of the distribution. In order to be eligible for tax-free treatment, it
is not necessary to rollover the entire qualified total distribution. In fact,
you are not permitted to roll over any after-tax employee contributions which
you have made to your employer's qualified retirement plan. However, the
earnings attributable to such after-tax contributions may be rolled over. Any
portion of a qualified total distribution which you retain, except your own
after-tax contributions, will be subject to current income tax.
If you receive a qualified total distribution from your employer's plan and roll
over part or all of it into an IRA, you may later roll over those assets into a
new employer's plan (if the plan permits you to do so). Under such
circumstances, your IRA serves as a holding account or conduit for those assets.
However, you may roll over those assets into another qualified employer's plan
only if they consist of funds received from the first employer's plan and
earnings on those funds, and you did not mix other IRA contributions or funds
from other sources with them.
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<PAGE>
If you receive a "total distribution," within the meaning of the Internal
Revenue Code, from a Section 403(b) annuity or custodial account you may also
make a tax-free rollover to an IRA if such distribution is transferred to an IRA
within 60 days after you receive it.
The term "partial distribution," means a distribution during a single tax year
which represents at least 50% of the balance due you from a qualified retirement
plan or tax-sheltered annuity or custodial account and which is paid to you:
(i) Because you separated from service with the employer;
(ii) Because you became disabled while working for the employer; or
(iii) Because of the death of your spouse while he or she was covered under the
plan and you are named as the beneficiary.
You may elect to roll over tax-free, all or part of a partial distribution from
a qualified plan or a tax-sheltered annuity or custodial account into an IRA.
Such rollover must occur within 60 days of the receipt of such partial
distribution in order to qualify for tax-free treatment. A rollover of a partial
distribution should not be confused with partial rollovers of a total
distribution from an employer's qualified plan. If you roll over a partial
distribution from a qualified plan, you will lose the ability to use special
income averaging on subsequent distributions from the qualified plan.
In order to properly roll over a qualified total distribution or partial
distribution you must make a rollover election, by designating in writing, to
the trustee of the IRA that such amount is to be treated as a rollover
contribution.
If you receive a distribution from your spouse's employer's retirement plan
pursuant to a "qualified domestic relations order", you may be eligible to make
a tax-free rollover to an IRA. In order to obtain tax-free treatment, the
balance to your credit under the retirement plan must be paid or distributed to
you within one taxable year. You may rollover any portion of the cash or
property received in such distribution to an IRA. In the case of a distribution
of property other than cash, the property received must be rolled over. It
should be noted that there is no specific requirement that the rollover be made
within 60 days from receipt of the distribution as in the case of other
rollovers.
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For retirement plan distributions payable to you on or after January 1, 1993,
any eligible rollover distribution, as defined by the Unemployment Compensation
Amendment of 1992, may be rolled over into an IRA or other eligible retirement
plan. Your employer is required to provide you with a notification after you
terminate employment which explains the new rollover rules.
First Investors Corporation (including its affiliates), Administrative Data
Management Corp. and First Investors Savings Bank, S.L.A. takes no
responsibility, nor assumes any liability for any rollover made by you which
does not qualify as a tax-free rollover under the Internal Revenue Code. Since
penalty taxes may be imposed (in addition to other possible negative tax
consequences) when invalid rollovers are made to an IRA, please consult with
your tax advisor to ensure that any rollover is made in the appropriate manner.
7. DISTRIBUTIONS
For taxable years beginning after 1984, the IRA distribution rules are similar
to the rules for distributions from qualified retirement plans, pursuant to
regulations to be issued by the Secretary of the Treasury. Proposed regulations
were issued on July 24, 1987 relating to required distributions from IRAs. This
Disclosure Statement does not discuss the proposed regulations. If you would
like specific advice regarding the proposed regulations you should confer with
your attorney or other qualified tax advisor.
Your IRA is intended to provide a source of income to you after attainment of
age 59 1/2 or if you become disabled. Distributions other than amounts rolled
over into another IRA or qualified plan are taxed as ordinary income in the year
received by you. With certain exceptions, distributions which occur prior to age
59 1/2 will be subject to a 10% additional tax on premature distributions.
Please refer to Section 8 for a discussion of the distributions occurring prior
to age 59 1/2 which are not subject to the 10% tax.
While distributions from your IRA may commence without penalty for early
withdrawal at any time after you attain age 59 1/2, distributions must commence
on or before the first day of April of the year following the year in which you
attain 70 1/2. Distributions must be paid to you in accordance with one of the
following methods:
(i) A single lump sum payment; or
(ii) Substantially equal monthly, quarterly, semi-annual, or annual payments
over a period certain not extending beyond your life expectancy or the joint and
last survivor expectancy of you and your designated beneficiary.
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Notwithstanding that distributions may have commenced pursuant to option (ii)
above, you may receive a distribution in the balance in your IRA at any time.
Distributions also must meet certain minimum distribution requirements. Either
the entire interest in the IRA must be distributed before April 1 following the
year you attain age 70 1/2 or payments must be made over a period no greater
than your life expectancy or over the life expectancy of you and your designated
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 0% tax may be waived by the Internal Revenue Service.
At the time that you establish your IRA you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right
prior to the complete distribution of your IRA to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate shall
be treated as your designated beneficiary. If you should die after the
distribution of your IRA has commenced, the remaining portion of your IRA must
continue to be distributed at least as rapidly as under the method of
distribution being used prior to your death. If you should die before the
distribution of your IRA has commenced, your entire interest in your IRA must be
distributed in accordance with one of the following provisions:
(i) The entire balance of your IRA is distributed within five (5) years after
your death;
(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments over the
life expectancy of such beneficiary commencing no later than one (1) year after
your death;
(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive substantially equal periodic payments over his or her life
expectancy, commencing at any date prior to the date on which you would have
attained age 70 1/2;
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(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his or her own IRA and receive distributions under
the general distribution rules discussed above. In addition to the distributions
described above, you may also receive a distribution from your IRA for the
purpose of transferring the assets into another individual retirement account,
individual retirement annuity, or qualified retirement plan. A rollover
distribution is not taxable to you provided that it is properly redeposited
within 60 days of receipt. Furthermore, any required distributions may not be
rolled over. Please refer to Section 6 for a discussion of the requirements
which must be satisfied in order to qualify for tax-free rollover treatment.
8. BENEFICIARY DESIGNATION
You may name Primary and Contingent beneficiaries to receive your First
Investors IRA accounts in the event of your death. Unless you instruct
otherwise, your Beneficiary Designation shall apply to all your First Investors
IRA accounts. Any new or subsequent Beneficiary Designation you file with First
Investors will therefore (unless you instruct otherwise) revoke and replace any
prior Beneficiary designations we have on file.
Upon your death, payment of your IRA accounts will be made to your Primary
Beneficiaries who survive you, in equal shares. In the event of a Primary
Beneficiary's death, his or her interest in your IRA accounts will be divided
proportionately among your surviving Primary Beneficiaries, based on their
percentages indicated. If no Primary Beneficiary survives you, then payment of
your IRA accounts shall be made to your Contingent Beneficiaries named by you,
who survive you.
In the event that no Primary Beneficiary or Contingent Beneficiary survives you,
or no Beneficiary Designation is on file with First Investors on the date of
your death, then your IRA accounts will be paid to your estate.
9. TAX TREATMENT OF DISTRIBUTION
A. Income Tax
As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA, the
portion of your IRA distribution consisting of non-deductible contributions will
not be taxed again when received by you. If you make any non-deductible IRA
contributions, each distribution from your IRA will consist of a nontaxable
portion (return of non-deductible contributions) and a taxable portion (return
of deductible contributions, if any, and earnings). Thus you may not take a
distribution which is entirely tax free. The following formula is used to
determine the nontaxable portion of your distributions for a tax year:
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Non-deductible
Contributions x Total Distribution= Nontaxable
- ------------- (for the year) Distributions
Year end IRA (for the year)
Balance
+ total distribution
(for the year)
The following illustrates how you will determine the nontaxable portion of your
distributions for a taxable year.
Example: Ms. Gray has made the following contributions to her IRA:
YEAR DEDUCTIBLE NON-DEDUCTIBLE
- ---- ---------- --------------
1984 $2,000 $0
1985 $2,000 $0
1986 $2,000 $0
1987 $1,000 $1,000
1988 $0 $2,000
----- -----
$7,000 $3,000
During 1989, Ms. Gray receives a $1,000 distribution from her IRA. On December
31, 1989 the total value of Ms. Gray's IRA is $14,000. the nontaxable portion of
the distribution she received during 1989 is determined as follows:
$3,000 x $1,000 = $200
- ----------------
$14,000 + $1,000
To determine your year end IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as simplified employee
pension (SEP) IRAs, and rollover IRAs. You also add back the distributions taken
during the year.
A single lump sum distribution from your IRA is not entitled to ten year
averaging, five year averaging or capital gains treatment accorded lump sum
distributions from a qualified plan.
B. Early Withdrawal Tax
In general, distributions from your IRA which occur prior to you attaining age
59 1/2 will be subject to adverse tax consequences. Not only will such
distributions be fully taxable to you as ordinary income, such distributions
will also be subject to a 10% additional tax.
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In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death,
disability and divorce will be exempt from the 10% additional tax. You are
considered disabled if you are "unable to engage in any substantial gainful
activity because of a medically determinable physical or mental impairment which
can be expected to result in death or to be of long, continued, and indefinite
duration." In addition, distributions before age 59 1/2 are not subject to the
10% tax if made in the form of substantially equal periodic payments and are
made over your life expectancy or the joint life expectancies of you and your
designated beneficiary.
Distrbituons commencing in 1997 which are used to pay medical expenses in excess
of 7.5% of the individual's adjusted gross income shall be exempt from the 10%
penalty. In addition, penalty-free distributions may be taken on or after
January 1, 1997 to purchase health insurance if an individual has been receiving
unemployment compensation for 12 weeks or more. Please see Section 5.E for
information about the 25% penalty which can apply to early withdrawals from a
SIMPLE-IRA.
C. Excess Distributions Excise Tax
A 15% excise tax is imposed on annual distributions from IRAs and other
tax-favored retirement arrangements to the extent that such distributions in the
aggregate exceed $150,000 during any year. For certain qualifying "lump-sum
distributions" the threshold amount, above which the excise tax is applied, is 5
times the applicable threshold for annual distributions. A similar tax is
imposed upon your estate if you die with "excess accumulations". There are
special rules which may apply if you had substantial (greater than
$562,500)total accrued retirement benefits as of August 1, 1986 and you made a
special election ("grandfather" election) by the due date of your 1988 Federal
income tax return. You should discuss these matters with your tax advisor.
D. Gift Tax
Your designation of a beneficiary for your IRA will not be treated as a gift and
will not subject you to Federal gift taxes.
E. Estate Tax
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.
10. PROHIBITED TRANSACTIONS
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You or your beneficiary may not participate in any transaction with your IRA
which is prohibited by law. Such "prohibited transactions" include but are not
limited to:
(i) the sale, exchange, or lending of any property;
(ii) lending of money or other extension of credit;
(iii) furnishing of goods, services, or facilities;
(iv) the use of income or assets of the IRA by you or your beneficiary; and
(v) the use of your IRA as security for a loan.
If such transactions are engaged in, your IRA will be disqualified and will lose
its tax-exempt status. Under such circumstances, your IRA will be considered to
have been distributed to you and will be subject to the income and additional
taxes discussed above.
11. REPORTING REQUIREMENTS
If a transaction has occurred upon which a special penalty tax is imposed, such
as an excess contribution, a premature distribution or a failure to make a
timely distribution, you are required to file Form 5329 with your annual income
tax return for such year. Form 5329 need not be filed if the only activity for
the year is the making of contributions or the distribution of permissible
benefits.
12. IRS APPROVAL
This IRA is a model IRA which follows the approved document considered by the
Internal Revenue Service to meet the applicable requirements of the Internal
Revenue Code. Therefore, the Internal Revenue Service will not issue a formal
determination as to the qualified status of your IRA. Further information can be
obtained from any office of the Internal Revenue Service. Please be aware that
the Internal Revenue Service's approval is a determination only as to the form
of the IRA does not represent a determination as to the merits of the IRA.
13. IRA BALANCE
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon the market values of the securities in the
mutual fund investment portfolio, which are subject to fluctuations; therefore,
growth in the value of your IRA cannot be projected or guaranteed. Dividends
from net investment income and capital gains distributions paid by the mutual
funds selected will be reinvested in fund shares at the applicable reinvestment
price as of the respective reinvestment dates and such additional shares will be
credited to your IRA.
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14. FEES, CHARGES and COMMISSIONS
A. IRA Custodian Fees
The Custodian of your IRA charges $7.00 for each distribution other than
periodic cash payments; and $1.00 for each periodic cash payment. These fees are
applicable regardless of the manner in which your IRA is funded. The Custodian
reserves the right to waive any of its fees at any time and to revise its fee
schedule upon written notice to the IRA holder.
B. Mutual Fund Commissions
If you fund your IRA by the direct purchase of Class A mutual fund shares, a
maximum sales commission of 6.25% of the offering price may be charged. Class A
share commissions range from 6.25% to 1.5% of the fund's offering price. Reduced
Class A share commissions apply for purchases of more than $25,000 under the
fund's Rights of Accumulation Privilege or a Letter of Intent. If you fund your
IRA by the direct purchase of Class B shares, purchases will be transacted at
the fund's net asset value and a contingent deferred sales charge may be imposed
upon redemption of such shares.
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To Establish a First Investors IRA
1 To Establish a First Investors Individual Retirement Account (IRA):
-------------------------------------------------------------------
Submit the following documents:
1. Completed and signed First Investors IRA Master Account
Application.
2. Check or money order in the amount of the IRA contribution.
Make check payable to:
First Investors Corporation
FBO
Name of Shareholder
3. Send applicable documents to:
Administrative Data Management Corp.
Attention: Retirement Department
581 Main Street
Woodbridge, NJ 07095-1198
2 Custodial Fee (No Installation or Annual Fees):
-----------------------------------------------
Each periodic distribution will be charged $1.00; other distributions,
including a single distribution of the entire account will be charged $7.00;
extra services may require special fees which will be detailed upon receipt of a
specific written request outlining the service to be performed. Any of the fees
may be waived by the Custodian at any time. The fee schedule is subject to
change by the Custodian upon 45 days' notice to the individual.
You should retain the Disclosure Statement and Custodial Agreement.
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CUSTODIAL AGREEMENT
INDIVIDUAL RETIREMENT ACCOUNT
FORM 5305-A
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), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)). 2. No part of the custodial funds may be invested in
collectible (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.
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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
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(ii) Be distributed in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the requirements
of section 408(b)(3) and its related regulations has irrevocably commenced,
distributions are treated as having begun on the Depositor's required beginning
date, even though payments may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been distributed
and if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
5. In the case of 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.
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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 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.
ARTICLE VIII
1. By execution of the First Investors Individual Retirement Account Application
(the "Application"), the individual named therein (the "Depositor") has applied
for an Individual Retirement Account (the "Account") described in Section 408(a)
of the Internal Revenue Code of 1986 (the "Code") in order to provide for his or
her retirement and for the support of his or her beneficiaries after death. The
Custodian, by executing the Application, has established an Account for the
Depositor and has accepted its appointment as Custodian of the account. The
Depositor and the Custodian hereby agree that the Account shall be governed by
the provisions of the Agreement and the Application which is made a part hereof.
The Account is created for the exclusive benefit of the Depositor and his or her
beneficiaries.
2. (a) Annual contributions must be made in cash by check or money order payable
to "First Investors Corporation" and may be made in one or more payments;
provided, however, that no such payment shall be smaller in amount than the
minimum amount, if any, required for investment in the securities of the
Designated Investment Company. The Custodian shall have no obligation to compel
the Depositor to make any contribution, nor shall it be required to notify the
Depositor of the existence or amount of an "excess contribution", if any, as
that term is defined in Section 4973(b) of the Code. Annual contributions may be
made to the Account for the benefit of the Depositor by his or her employer.
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(b) Contributions which qualify as "rollover contributions" described in Section
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code may be made
to the Account; provided, however, that such contributions consist solely of
cash (made by check or money order payable to "First Investors Corporation") in
an amount no smaller than the minimum amount, if any, required for investment in
the securities of the Designated Investment Company, and/or securities of a
Designated Investment Company. The Depositor shall identify rollover
contributions as such in writing and the Custodian shall rely on such
identification. A contribution identified in writing by the Depositor as a
rollover contribution from a qualified retirement plan shall not constitute an
Account separate from any Account established hereunder to which annual
contributions have been or will be made, unless the Depositor instructs the
Custodian otherwise.
3. The Custodian shall maintain a record of the Account for the Depositor
reflecting his or her contributions, the investment thereof, and any accretions
upon such investments.
4. (a) The Custodian shall invest all such cash contributions less unpaid
custodial fees in the securities of the Designated Investment Company specified
by the Depositor in the Application and the Custodian or its nominee shall be
the holder of record, and the Depositor shall be the beneficial owner of all
such securities and any other property in the Account. The term "Designated
Investment Company" shall mean a registered investment company of the open-end
management type or unit investment trust type, the securities of which are
sponsored, distributed and/or underwritten by First Investors Corporation,
provided however, that the purchase of a Periodic Payment Plan with insurance
shall not be permitted. The Depositor (or following the death of the Depositor,
his or her beneficiary) may, by instructions given to the Custodian, determine
the investment in which his or her Account is to be invested or reinvested at
any time and from time to time. The Depositor must provide specific instructions
for specific purchases, sales, exchanges, and other transactions. By giving such
instructions to the Custodian, the Depositor will be deemed to have acknowledged
receipt of the prospectus, if any, for any shares or other investment vehicles
in which the Depositor directs that the Custodian invest assets in his or her
Account. The Custodian shall be responsible for executing such instructions
promptly; provided, however, that neither the Custodian, the transfer agent,
Administrative Data Management Corp., nor any affiliated company shall be
obligated to invest any portion of the Depositor's initial contribution to his
or her Account until seven (7) calendar days have elapsed from the date of
acceptance of the application or agreement by or on behalf of the Custodian.
Investments held in the Account may be divided between or among more than one
Designated Investment Company.
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<PAGE>
(b) All cash dividends and capital gains distributions received upon assets in
the Account shall be reinvested in the securities of the Designated Investment
Company and credited to the Account. In the event that, with respect to any such
dividends and distributions, the Custodian as holder of record may elect to
receive such dividend or distribution in either additional shares, cash or other
property, the Custodian shall elect to receive such distribution in additional
shares. Sales charges attributable to the acquisition of securities shall be
charged to the Account for which such securities are acquired. No part of the
funds in the Account shall be invested in life insurance contracts.
(c) The Custodian or its agent shall deliver, or cause to be executed and
delivered, to the Depositor all notices, prospectuses, financial statements,
proxies, voting instruction cards, and proxy soliciting material relating to
securities held in the Account. The Custodian in its capacity as Custodian
hereunder or its agent shall vote all shares of the Designated Investment
Company held hereunder in accordance with the written instructions of the
Depositor.
5. The Depositor shall have the right, prior to completion of distribution of
his or her Account, by written notice to the Custodian or its agent, to
designate, revoke, and to change a designation of a beneficiary or beneficiaries
of any distribution from the Account following the death of the Depositor, and
if no such beneficiary is designated in accordance herewith the Depositor's
beneficiary shall be his or her estate.
6. The Depositor shall not use the Account or any portion thereof as security
for a loan, nor shall the individual or his or her beneficiary engage in any
transaction prohibited by Section 4975 of the Code.
7. (a) Neither the Custodian, its agent nor any affiliates shall be responsible
for any liability arising out of this Agreement except such liability as is
occasioned by the negligence or willful misconduct of the Custodian, its agent
or affiliates. Neither the Custodian, its agent nor any affiliates shall be
responsible for any action or no action taken at the Depositor's request and
each may rely upon and shall be protected in acting upon any written order from
the Depositor or any other notice, request, consent, certificate or other
instrument reasonably believed by the Custodian, its agent or any affiliate to
be genuine and to have been properly executed. Neither the Custodian, its agent
nor any affiliates shall be liable to pay interest on any cash or cash balances
maintained in the Account which has not been invested.
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(b) Neither the Custodian, its agent nor any affiliates shall be obligated to
defend or engage in any suit with respect to the Account unless each shall first
have agreed in writing to do so and shall have been fully indemnified to the
satisfaction of the Custodian, its agent and/or any affiliates. The Depositor
shall at all times indemnify and hold harmless the Custodian, its agent and any
affiliates from any liability arising from any action taken by the Custodian,
its agent or any affiliates upon the written instructions of the Depositor.
(c) The Custodian may resign at any time upon sixty (60) days' notice in writing
to the Depositor and may be removed by the Sponsor (First Investors Corporation)
or the Depositor at any time upon thirty (30) days' written notice to the
Custodian or such shorter notice as may be acceptable to the Custodian, which
successor shall be a bank or such other qualified person under Section 408(a)(2)
of the Code. If within sixty (60) days after the Custodian's resignation or
removal the Depositor or the Sponsor has not appointed a successor custodian
which has accepted such appointment, the custodian shall, unless it elects to
terminate the Account, appoint such successor itself. Upon receipt by the
Custodian of written notice of acceptance of such appointment by a successor
custodian, the Custodian or its agent shall transfer and pay over to such
successor the assets of the Account and all records pertaining thereto. In
connection with such transfer, however, the Custodian or its agent is authorized
to reserve such sum of money as is necessary for the payment of its fees.
(d) The Custodian shall terminate the Account if within sixty (60) days after
the removal or resignation of the Custodian no qualified successor custodian has
notified the Custodian of its acceptance to act. Termination of the Account
shall be effected by distributing the assets of the Account by a single sum
payment in cash or in kind as the Depositor may elect. Upon completion of such
distribution, the Custodian, its agent and any affiliates shall be relieved from
all further liability with respect to all amounts so distributed.
8. (a) The Depositor agrees that the fees of the Custodian as set forth in the
Application shall be paid when due. Such fees may be waived by the Custodian at
any time and may be revised by the Custodian upon forty-five (45) days' written
notice to the Depositor. Custodial fees which have been revised in accordance
with this Section will become legally binding upon the Depositor unless he or
she objects by sending written notice of such objection to the Custodian within
forty-five (45) days of the date of the Custodian's or its agent's notice to the
depositor of such revision.
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9. The Custodian appoints Administrative Data Management Corp., the transfer
agent for each of the Designated Investment Companies hereunder, as its agent
for receiving and processing contributions, transferring assets of the Account,
processing shareholder correspondence (e.g., revocations and designation of
beneficiaries), sending required notices and other documents relating to the
Account and voting shares in the Account hereunder.
10. The Federal Deposit Insurance Corporation (FDIC) does not insure amounts
invested in an Individual Retirement Account merely because the trustee or
custodian, such as the Custodian, is an institution the accounts of which are
covered by such insurance. Only investments in the accounts of such institutions
themselves are insured by the FDIC subject to its rules and regulations.
11. This Agreement may be amended by the Sponsor (First Investors Corporation)
by submitting a copy of any such amendment to the Depositor and to the Custodian
at least thirty (30) days in advance of the effective date of any such
amendment; provided, however, that no such advance submission shall be required
in the case of any amendment that may be required by the Internal Revenue
Service, from time to time, so that the Account shall remain an Individual
Retirement Account under Section 408 of the Code. For purposes of Article VII, a
Depositor shall be deemed to have consented to any amendment not required by the
Internal Revenue Service if he or she does not terminate the Account before the
effective date of such amendment.
12. This Agreement shall be construed, administered and enforced according to
the laws of New Jersey.
GENERAL INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF THE FORM
Form 5305-A is a model custodial account agreement that meets the requirements
of section 408(a) of the Code 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.
28
<PAGE>
Individuals may rely on regulations for the Tax Reform Act of 1986 compliance 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 receive
from your custodian, see 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) of the Code, or any person who has the approval of the
IRS to act as custodian.
Depositor - The Depositor is the person who establishes the IRA 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 required only for an IRA
for which a return is filed to report unrelated business taxable income. 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 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) of the Code have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that re agreed to by the Depositor and the 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 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.
29
<PAGE>
IMPORTANT INFORMATION
This IRA Master Account Application applies to all accounts registered
identically in funds sponsored by First Investors Corporation and its
affiliates.
Section 4. I understand that through accumulated investments I can reduce my
sales charges on purchases of Class A shares. In the next 13 month period, I
plan to invest in shares of one or more First Investors eligible funds the
aggregate amount checked in this application. I understand that I may combine
Class A and Class B shares of any eligible (including Class B shares of the
money market funds) funds to qualify for this reduced sales charge. I hereby
irrevocably appoint First Investors Corporation ("FIC") my agent and my attorney
with full power to redeem any shares held in escrow, if necessary. I understand
that if the amount indicated is not invested within 13 months, the reduced sales
charge does not apply.
Section 8. I wish to establish an automatic payroll investment program and
authorize my employer to initiate credit entries of amounts deducted from my pay
to an account at First Financial Saving Bank, S.L.A. ("FFS"). I further
authorize FFS to accept any such funds and to transfer them to First Investors
for investment in the First investors account(s) designated in the application
or as changed by my written instructions to FIC. FFS shall have no
responsibility for the correctness thereof or for determining the existence of
any further authorization relating hereto. I agree that neither FFS, FIC nor any
affiliates will be liable for any loss, liability, cost or expense from acting
upon such instructions. I understand that in order to terminate this
authorization I must give written notice to my employer.
--------
Section 9. I authorize FIC to initiate debit entries to my bank account listed
in this application. Investments will be made the same day my bank account is
debited or, if a weekend or holiday, on the following business day. If such
debit is dishonored by the bank upon presentation, FIC may discontinue this
service and cancel the shares purchased and charge me for any loss.
Section 10. I authorize Administrative Data Management Corp. ("ADM"), as
transfer agent, to accept and act upon telephone instructions from myself, or my
FIC Registered Representative (if I have so authorized), to effect exchanges of
shares among eligible funds owned by me.
If I authorize my FIC Registered Representative to effect telephone exchanges
upon my instruction, I understand that this authorization applies to my
representative only as long as the Registered Representative is assigned to my
account(s), according to the books and records of FIC. If my Registered
Representative is replaced with a new FIC Registered Representative by FIC, the
telephone exchange privileges assigned to my former representative will
automatically be transferred to the new FIC Registered Representative. Telephone
exchange privileges may be modified or terminated at any time at the sole
discretion of FIC, ADM, or the fund(s). This authorization may be terminated by
submitting written notice to ADM. Please allow 5 days processing time after
receipt.
30
<PAGE>
In acting upon telephone instructions, First Investors and the Funds use
procedures which are reasonably designed to ensure that such instructions are
genuine, such as (1) obtaining some or all of the following information: account
number, name and social security number, mother's maiden name, last elementary
school attended; (2) recording all telephone instructions; and (3) sending
written confirmation of each transaction to my address of record. I understand
that this policy places the entire risk of loss for unauthorized or fraudulent
transactions on me, except that if First Investors Corporation, the Funds, or
their affiliates do not follow reasonable procedures, some or all of them may be
liable for any such losses.
Prior to making an exchange, I have received and read the prospectus of the fund
into which the exchange is being made. Only one telephone exchange is permitted
within any 30 day period for each account authorized. Each of the First
Investors funds reserves the right to change or terminate the exchange
privilege. An administrative fee may be charged on exchanges and may be waived
at any time.
Executive Investors Funds
If I have purchased Executive Investors Funds, I have received the required
Disclosure Form.
31
FIRST INVESTORS CORPORATION
403(b) CUSTODIAL ACCOUNT AGREEMENT
FIRST FINANCIAL SAVINGS BANK, S.L.A., CUSTODIAN
FOR EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND FOR CUSTODIAL ACCOUNTS
NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
The Custodial Account established by the Employer is created pursuant to Section
403(b)(7) of the Internal Revenue Code of 1986, as amended, and regulations
thereunder (collectively referred to as the "Code") in order to provide a
treatment benefit for the Employee named in the 403(b) Custodial Master Account
Application, which is made a part of this Agreement ("the Application"), solely
through investment in the securities of a regulated investment company.
Any Employer that establishes this Custodial Account must be an organization
described in Section 403(b)(1)(A) of the Code. The Employer represents that the
Custodial Account is exempt from the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA") because it is a governmental plan as
defined in Section 3(32) of ERISA, a church plan as defined in Section 3(33) of
ERISA, or because Employer involvement with the Custodial Account is limited in
accordance with Section 2510.3-2(f) of the Department of Labor regulations.
In the event that the Custodial Account is not exempt from the requirements of
ERISA due to the Employer making contributions to the Account (as distinguished
from the Employees' salary reduction contributions) or for any other reason,
then in such event it shall be the Employer's responsibility to comply with the
relevant reporting, documentation, discrimination, and disclosure requirements
applicable under the Code and ERISA.
I. CONTRIBUTIONS
Contributions must be made by check or money order payable to First Investors
403(b) and may be made in one or more payments, provided however, that no such
payment shall be smaller in amount than the minimum amount, if any, required for
investment in the securities of the selected Designated Investment Company. The
Custodian shall have no obligation to compel the Employer or the Employee to
make any Contribution, nor shall the Custodian be required to notify the
<PAGE>
Employer or Employee if any Contribution made exceeds the "exclusion allowance"
under Section 403(b)(2) or limitations under Sections 402(g) and 415 of the
Code. In no event may contributions to the Custodial Account and all other
plans, contracts or arrangements of the Employer exceed the limitation in effect
under Section 402(g)(1) of the Code.
A transfer of monies from an existing custodial account qualified under Section
403(b) of the Code may be made to the Custodial Account provided that the terms
of such custodial account or annuity do not disallow such transfer. Neither
First Investors Corporation, Administrative Data Management Corp., the
Custodian, nor any of their affiliates or agents shall be liable in any manner
if a transfer is made by an Employee from a 403(b) account that does not allow
for such a transfer. Any monies transferred hereunder shall be invested by the
Custodian in accordance with written instructions received pursuant to Section
IX. hereunder provided, however, that amount transferred may be invested only in
securities of a Designated Investment Company as defined in Section III. below.
Written instructions accompanying any such transfer shall state that the amount
being transferred is a transfer from a 403(b) Custodial Account or annuity, as
the case may be.
II. ACCOUNT
The Custodian shall maintain a Custodial Account (the "Account") reflecting
Contributions and any transfers of cash made in accordance with Section I.
above, the investment thereof, and any income gains, or losses attributable to
such investments. The interest of the Employee in the Account shall at all times
be non-forfeitable, and the assets therein shall not be commingled with the
property of others, provided however, that investment in securities of a
Designated Investment Company shall not be considered commingling. Contributions
to the Account, and the income thereon, may not be used for, or diverted to,
purposes other than for the exclusive benefit of Employees and their
beneficiaries.
III. INVESTMENTS
The Custodian shall invest all contributions less unpaid custodial fees (if any)
in the securities of the Designated Investment Company(ies) specified on the
Application, and the Custodian or its nominee shall be the holder of record, and
the Employee shall be the beneficial owner, of all such securities and any other
property
<PAGE>
in the Account. The term "Designated Investment Company" shall mean a registered
investment company of the open-end management or unit investment trust type, the
securities of which are sponsored, distributed and underwritten by First
Investors Corporation, all of which are regulated investment companies within
the meaning of Section 851(a) of the Code. The selection of Designated
Investment Company with respect to both the investment of Contributions
previously made and those made in the future may be changed upon receipt by the
Custodian of Written Instructions, as provided in Section IX. below, requesting
such change, subject to the requirements that the minimum investment in any
Designated Investment Company shall not be smaller than the minimum amount, if
any, required for investment in the securities of any selected Designated
Investment Company. Investments held in the Account may be divided between or
among more than one Designated Investment Company. The Custodian may charge an
annual maintenance fee for each Designated Investment Company in the Account.
All cash dividends, capital gains, and dividend distributions received upon
assets in the Account shall be reinvested in the securities of the selected
Designated Investment Company and credited to the Account. In the event that,
with respect to any such dividends and distributions, the Custodian as holder of
record may elect to receive such distribution in additional shares, cash or
other property, the Custodian shall elect to receive such distribution in
additional shares. Sales and other charges attributable to the acquisition of
securities shall be charged to the Account for which such securities are
acquired.
The Custodian shall deliver or cause to be delivered to the Employee all
notices, prospectuses, financial statements, proxies, voting instruction cards
and proxy soliciting requests relating to the securities held in the Account.
The Custodian in its capacity as Custodian hereunder shall not vote any shares
of the Designated Investment Company held hereunder except in accordance with
the written instructions of the Employee.
IV. DISTRIBUTIONS
The Custodian will distribute the assets of the Account, in cash or in kind,
upon receiving Written Notice, in accordance with Section IX. below, of the
Employee's retirement disability (as defined in Section 72(m)(7) of the Code),
attainment of age 59 1/2, financial hardship or separation of service. Employees
eligible for a distribution shall receive a Notice from the Custodian. Such
<PAGE>
Notice shall inform the Employee of the tax consequences of a 403(b)
distribution, the Employee's right to elect to make a Direct Rollover, and the
20% mandatory income tax withholding that will be applied against any "Eligible
Rollover Distribution" which is not directly rolled over to an eligible
retirement plan.
An "Eligible Rollover Distribution" is, in general, the taxable portion of any
distribution to an eligible employee, which is not:
1. a "minimum required distribution" due to attainment of age 70 1/2,
pursuant to Section 401(a)(9) of the Code.
2. a part of a series of equal (or substantially equal) payments made over
either the lifetime (or life expectancy) of the Employee or over the joint
lifetimes (or joint life expectancies) of the Employee and his designated
beneficiary; or
3. a part of a series of equal (or substantially equal) payments for a period
of ten (10) years or more.
An Eligible Rollover Distribution may be transferred by the Employee to an
eligible retirement plan, as a Direct Rollover. An eligible retirement plan is
an Individual Retirement Arrangement (IRA) or another 403(b) plan which accepts
such a transfer.
For distributions on or after January 1, 1989 on account of financial hardship,
only the Employee's salary reduction contribution (and not the income thereon)
may be distributed. Such Written Notice shall be irrevocable and shall specify
the date upon which the distribution shall commence and that the distribution
shall be effected by:
A. a single sum payment, or
B. equal or substantially equal monthly, quarterly or annual payments over a
period certain; which may be based upon, but not exceed, the life expectancy of
the Employee and his or her designated beneficiary. The life expectancy of the
Employee and the Employee's spouse may be recalculated, but not more frequently
than once annually.
The Employee's Account must begin to be distributed to the Employee no later
than April 1 of the year following the year in which the Employee attains age 70
and a half (whether or not the Employee has retired). However, for an Employee
who has attained age 70 1/2
<PAGE>
before January 1, 1988 or for an Employee covered under a governmental plan or a
church plan within the meaning of Section 401(a)(9)(C) of the Code, the required
beginning date is April 1 of the year following the later of the year in which
the Employee attains age 70 1/2 or the year in which the Employee retires.
Upon the death of the Employee, the following distribution provisions shall take
effect:
(a) If the Employee dies after distributions have commenced and before the
entire interest in his or her Account has been distributed, the remaining
portion will be distributed at least as rapidly as under the method of
distribution being used as of the date of the Employee's death;
(b) If the Employee dies before distributions have commenced, the remaining
interest in his or her Account will be distributed within five years after his
or her death or at such time as provided by regulations prescribed by the
Secretary of the Treasury.
(c) Notwithstanding paragraphs (a) and (b) above, if any portion of the
Employee's interest is payable to or is for the benefit of a designated
beneficiary, such portion will be distributed over a period not exceeding the
life expectancy of such beneficiary. Distributions under this paragraph (c)
shall commence within one year following the date of the Employee's death or at
such time as provided by regulations prescribed by the Secretary of the
Treasury.
TO ESTABLISH A FIRST INVESTORS 403(B)
IMPORTANT EMPLOYER INFORMATION:
The Custodial Account must be established by an Employer described in Section
501(c)(3) of the Code which is exempt from tax under Section 501(a) of the Code
or that it is an educational organization described in Section 17(b)(1)(A)(ii)
of the Code, which is operated by a State, a political subdivision of a State,
or an agency or instrumentality of a State.
The Employer should not establish the Custodial Account unless the Account
constitutes a governmental plan as defined in Section 3(32) of the Employee
Retirement Income Security Act of 1974 (ERISA), a church plan as defined in
Section 3(33) of ERISA, or unless the Employer will have limited involvement in
accordance with Department of Labor Regulation Section 2510.3-2(f).
<PAGE>
1. TO ESTABLISH A FIRST INVESTORS 403(b) CUSTODIAL ACCOUNT:
A) Complete the "Amendment to Employment Agreement". Retain one copy
for your records and submit the other copy to your Employer.
B) Submit the following documents:
1. Completed and signed First Investors 403(b) Custodial Master
Account Application.
Send to:
Administrative Data Management Corp.
Attention: Retirement Department
581 Main Street
Woodbridge, New Jersey 07095-1198
2. Your Employer will send your 403(b) contributions to First
Investors to be invested as indicated on your application.
2. CUSTODIAL FEE (NO INSTALLATION OR ANNUAL FEES):
Each periodic distribution may be charged $1.00; other distributions,
including a single distribution of the entire account may be charged $7.00;
extra services may require special fees which will be detailed upon receipt of a
specific written request outlining the service to be performed. Any of the fees
may be waived by the Custodian at any time. The fee schedule is subject to
change by the Custodian upon 45 days' notice to the shareholder.
YOU SHOULD RETAIN THE DISCLOSURE STATEMENT AND CUSTODIAL AGREEMENT.
FIRST INVESTORS 403(b) CUSTODIAL ACCOUNT
FOR EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND FOR CUSTODIAL ACCOUNTS
NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
AMENDMENT TO EMPLOYMENT AGREEMENT
The Agreement is made and entered into on this __________ day of
<PAGE>
__________, 19___, between the Employee and Employer, an organization described
in section 403(b)(1)(A) of the Internal Revenue Code of 1986, as amended, ("the
Code"), in order to provide for the remittance of contributions to the First
Investors Corporation 403(b) Custodial Account maintained by First Financial
Savings Bank, S.L.A. ("the Custodian") for investment in securities of a
regulated investment company as defined in Section 851(a) of the Code.
In consideration of the mutual covenants contained herein and for other good and
valuable consideration, the Employer and Employee, intending to be legally
bound, agree as follows:
(1) The Employee hereby authorizes and directs the Employer, and the Employer
hereby agrees, to reduce the Employee's cash compensation by
____________________ per _______________ and promptly to contribute such amount
at the intervals herein above set forth to the Custodian at 581 Main Street,
Woodbridge, N.J. 07095-1198 by check made payable to "First Investors
Corporation" together with written instructions signed by the Employer setting
forth the name and address of the Employee and a direction that such
contributions be invested in the Designated Investment Companies indicated on
the 403(b) Custodial Master Account Application, with such contributions held by
the Custodian in a non-forfeitable First Investors Section 403(b) Custodial
Account.
(2) The reduction in compensation provided for in paragraph (1) above shall be
effective only with respect to compensation earned by the Employee after the
effective date hereof, which shall be the first date written above, and only
until termination of this Agreement (or upon an amendment to this Agreement
entered into between the Employee and Employer) and with respect to such sums
this Agreement shall be irrevocable.
(3) The Employee hereby releases all rights, present and future, to receive
payment of the Employee's compensation subject to reduction under this Agreement
except: (a) the right of the Employee's estate upon the death of the Employee
while in the Employ of the Employer, and (b) the right of the Employee, upon
termination of employment with the Employer by reason other than death, to
receive all or part of the sum specified in paragraph (1) above for which the
Employee has already rendered services but which contributions have not been
remitted to the Custodian for investment in the securities of a Designated
Investment Company.
<PAGE>
(4) The provisions contained herein shall apply to the employment agreement
currently in effect between the Employer and Employee and to any successor
employment agreements entered into between the parties and shall continue in
force until terminated by the Employee or Employer.
(5) This Agreement may be terminated at any time by the Employee or Employer by
giving thirty days' written notice of termination to the other party. Upon
termination of this Agreement during any calendar year, no new compensation
reduction agreement to provide contributions to purchase securities of a
regulated investment company in a custodial account under section 403(b)(7) of
the Code may be entered into between the Employer and Employee during such
calendar year.
(6) Except as otherwise specifically provided herein, this Agreement may not be
amended or modified. The foregoing sentence notwithstanding, the Employee may
change the Designated Investment Company(ies) or direct that contributions be
invested in additional Designated Investment Companies by giving written notice
thereof to the Employer not less than thirty days prior to the effective date of
such change.
(7) The undersigned Employer represents that it is an Employer described in
section 501(c)(3) of the Code which is exempt from tax under Section 501(a) of
the Code or that it is an educational organization described in Section
170(b)(1)(A)(ii) of the Code which is operated by a State, political subdivision
of a State, or an agency or instrumentality of a State.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and
attested to by its duly authorized officers, impressed with its corporate seal,
and the Employee has hereunto set his or her hand and seal, all on the day and
year first above written.
Attest:
-------------------------------------------
Organization's Name or Employer's Name
- ---------- -------------------------------------------
Signature of Authorized Officer of Employer
-------------------------------------------
Employee's Signature
-------------------------------------------
Employee's Social Security Number
(SEAL)
<PAGE>
FIRST INVESTORS 403(b) CUSTODIAL ACCOUNT
GENERAL INFORMATION
FOR EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND FOR CUSTODIAL ACCOUNTS
NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
I. INTRODUCTION
Section 403(b)(7) of the Internal Revenue Code of 1986, as amended, ("the Code")
permits contributions to be made to a Custodial Account maintained by a bank for
investment in securities of a regulated investment company to provide retirement
benefits for Employees of certain non-profit educational, charitable, humane and
religious organizations. Such contributions, to the extent that they do not
exceed limitations imposed by the Code, need not be included in the income of
the Employee for Federal income tax purposes. The First Investors Corporation
403(b) Custodial Account (the "Custodian Account") is intended to operate within
the provisions of Section 403(b)(7) of the Code. The discussion of Federal tax
consequences which follows is general in nature and not exhaustive, therefore
any Employer or Employee desiring to establish the Custodial Account should
consult with a qualified tax advisor.
The First Investors Corporation 403(b) Custodial Account is not suitable for use
by Employers who are subject to the requirements of the Employee Income Security
Act of 1974 (ERISA). Therefore, an Employer should not adopt the Custodial
Account unless the Account is a governmental plan as defined in Section 3(32) of
ERISA, a church plan as defined in Section 3(33) of ERISA, or unless Employer
involvement with the Account is limited in accordance with Section 2510.3-2(f)
of the Department of Labor regulations.
II. ELIGIBLE EMPLOYEES
Teachers, clerical, administrative, custodial and other employees who perform
services for the following types of tax-exempt organizations are eligible to
participate in the Custodial Account:
<PAGE>
(1) public educational institutions where the Employer is a state, a political
subdivision of a state or an agency or instrumentality of any of the foregoing;
included in this category are public elementary and secondary schools, state
colleges and universities, and (2) organizations described in Section 501(c)(3)
of the Code; specifically foundations, corporations, community chests or funds
organized and operated exclusively for religious, charitable, scientific,
testing for public safety, literary or educational purposes or for the
prevention of cruelty to children or animals. This category includes private,
non-profit, colleges, universities, parochial schools, research foundations, and
domestic welfare and humane societies which are or have been determined to be
Section 501(c)(3) organizations. Effective for years beginning after 1988, in
general, all Employees of the organization (other than a church described in
Section 3121(w)(3)(A) or (B) of the Code) must be eligible to make contributions
to the Custodial Account by salary reduction, except for Employees who
participate in a Section 457 deferred compensation plan, a Section 401(k) cash
or deferred arrangement or another Section 403(b) program. Students and
Employees who normally work less than 20 hours per week may be excluded if
certain conditions are met.
III. CONTRIBUTIONS
Contributions to the Custodial Account may be made by the Employer as a benefit
in addition to cash compensation1, or through the Employer by salary reduction.
If contributions are to be made by salary reduction, the Employer and Employee
must complete and execute two copies of the "Amendment to Employment Agreement".
This form must be completed and executed even if the Employer and Employee are
parties to a formal written contract of employment. One copy should be retained
by each. The periodic contribution to the Account must be inserted in Item 1.
The contribution may be expressed in dollars or as a percentage of the
Employee's compensation, contributions will increase or decrease automatically
as the Employee's compensation is increased or decreased.
The "Amendment to Employment Agreement" is intended to comply with
- --------
1Effective for years beginning 1988, if the Employer (other than a
church within the meaning of Section 312(w)(3)(A) or (B)) makes contributions to
the Custodial Account in addition to or in lieu of contributions pursuant to a
salary reduction agreement, the Custodial Account must satisfy the requirements
of Sections 401(a)(4), (5), (17) and (26), 401(m), and 410(b) of the Code as if
the Account were described in Section 401(a) of the Code.
<PAGE>
applicable Internal Revenue Service requirements relating to contributions
derived from salary reduction. Pursuant to the requirement, the Agreement must
be legally binding between the Employer and Employee, applicable only to
compensation earned after the effective date of the Agreement and, with respect
to such sums, must be irrevocable. In addition, only one salary reduction
Agreement can be made with the same Employer in any one tax year. The agreement
may not be amended but it may be terminated as to compensation earned subsequent
to the time of termination. It will not be considered an amendment of the
Agreement if the selection of Designated Investment Company is changed from time
to time.
In addition, the Employer and the Employee must complete, execute and forward to
First Investors Corporation two copies of the Application for Custodial Account.
First Investors Corporation will forward the copies of the Application to the
Custodian for acceptance. By executing the Application the Employee agrees to
the terms of the Custodial Account Agreement (which includes the Application).
IV. LIMITATIONS ON CONTRIBUTIONS
The Code presently imposes limitations on the excludable amounts which may be
contributed to the Custodial Account for each taxable year of the Employee.
Contributions to the Custodial Account may not exceed 20% of the includable
compensation2 of the Employee for such year multiplied by the number of years of
service2 in the employ of the Employer (but not less than one year), minus
amounts contributed in such previous years which were excludable from the gross
income of the Employee for Federal income tax purposes. (This highlighted
contribution formula shall hereinafter be referred to as the "Exclusion
Allowance".)
In determining "amounts contributed in previous years which were excludable from
the gross income of the Employee for federal income tax purposes" it is
necessary to aggregate Employer contributions made to any qualified pension or
profit sharing, or annuity plan under Sections 401(a) or 403(a), or to a state
retirement system, as well as previous contributions made under Section 403(b)
of the Code.
- --------
2"Includable Compensation" and "Years of Service" are defined terms
under the Code. Please refer to the definitions appearing in Section XI.
<PAGE>
Therefore, to calculate the Exclusion Allowance, Employer contributions for
prior and current years which were excludable from the gross income of the
Employee must be ascertained.
Because the term "includable compensation" does not include the amount of any
contribution to a 403(b) Account to the extent that such contribution does not
exceed the Exclusion Allowance, the maximum permissible contribution for an
Employee who has not more than one year of service with the Employer and for
whom excludable contributions have not previously been made, is one-sixth or 16
2/3% of salary before reduction.
Except as described in Sections V. and VI. below, the Exclusion Allowance is
subject to certain additional overall limitations. The Exclusion Allowance may
not exceed the lesser of: (a) $30,000 (or, if greater, 1/4 of the dollar
limitation in effect for defined benefit plans or (b) 25% of the Employee's
Compensation.2
V. SPECIAL ELECTIVE CONTRIBUTION
ALTERNATIVE FOR CERTAIN EMPLOYEES
While Contributions may continue to be based on the Exclusion Allowance,
Employees of Public Educational Institutions, Hospitals, Health and Welfare
Service Agencies and Home Health Service Agencies will be permitted, subject to
the limitations of Section IV.(a) and Section VI., special elective contribution
alternatives. Under the elective methods, contributions on behalf of Employees
may be calculated in accordance with any of the following alternative methods:
(a) The lesser of:
(i) 25% of the Employee's Includable Compensation plus $4,000,
(ii) The Exclusion Allowance, or
(b) The lesser of 25% of the Employee's Compensation or $30,000 (or 1/4 of the
dollar limitation in effect for defined benefit plans, if greater).
(c) In the Employee's year of separation from service, an amount equal to the
lesser of the Exclusion Allowance calculated by taking into account each year of
the period of years (but not more than ten) immediately preceding the date of
the Employee's separation from service, or $30,000 (or 1/4 of the dollar
limitation in effect
<PAGE>
for defined benefit plans, if greater).
Alternative (c) may be used only once. An election by an Employee to have any
one of the alternative methods in paragraphs (a), (b), or (c) above will
preclude an election to have any other of the alternative methods apply in any
future year. If alternative (b) is elected, contributions and benefits under the
Employer's qualified retirement plans must be combined with contributions to the
Custodial Account.
In addition to alternatives (a), (b) and (c) above, employees of certain church
organizations can elect to have other special limits apply. Under one of these
special limits these employees can use $10,000 as the limit on annual
contributions made on their behalf for a year. The lifetime maximum under this
method is $40,000. If a Church employee elects the $10,000/$40,000 limitation
described above, he or she cannot also elect to use election (c) above for one
year. In the alternative, if the Church employee does not have adjusted gross
income in excess of $17,000 for the year, he or she can annually elect a minimum
Exclusion Allowance equal to the lesser of $3,000 of his or her includable
compensation for the year. The Code requires that in order for an eligible
Employee to use any of the elective methods, his or her election must be
irrevocable and must be made in accordance with regulations under the Code.
VI. SPECIAL LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS
Notwithstanding the fact that a contribution falls within the limits of the
Exclusion Allowance or special elective contribution alternatives discussed
above, effective January 1, 1987, no more than $9,5000 in salary reduction
contributions may be contributed annually, and excluded from income, to a
Custodial Account. Furthermore, if an Employee also makes salary reduction
contributions under a qualified cash or deferred arrangement as defined in
Section 401(k) of the Code, or under a simplified employee pension as defined in
Section 408(k) of the Code, or under another 403(b) annuity contract or
custodial account, those contributions are all aggregated with the salary
reduction contributions under the Custodial Account for purposes of the $9,500
limit. The $9,500 limit is an overall cap on contributions and does not increase
the Employee's maximum contribution limit, if that is a lesser amount.
Employees of public educational institutions, hospitals, home
<PAGE>
health services, health and welfare service agencies or churches may be able to
make salary reduction contributions of more than $9,500 per year to their
Custodial Accounts if they have completed 15 years of service with that
institution. Under this exception, the maximum contribution is increased by the
lesser of a) $3,000; b) $15,000 reduced by any amounts in excess of $9,500 that
were contributed on behalf of the Employee in prior years pursuant to this
special rule; or c) the excess of (i) $5,000 multiplied by the Employee's number
of years of service with the Employer, over (ii) the amount of salary reduction
contributions made on the Employee's behalf for prior taxable years.
If an Employee contributes a greater amount to the Custodial Account than the
maximum amount described in the Section VI., the Employee may notify the
Custodian by March 1 following the year in which an excess amount is
contributed, of the amount of the excess (called an "Excess Deferral"). Upon
receiving such notice, the Custodian may distribute the amount of such Excess
Deferral (and the income thereon) by April 15 following the close of such year.
The amount of the Excess Deferral that is distributed is not includable in the
Employee's income and is not subject to the 10% additional tax on distributions
before age 59 1/2.
Contributions made pursuant to an Employee's one-time irrevocable election to
reduce salary, made at the time of initial eligibility to participate in the
Custodial Account, are not treated as salary reduction contributions for
purposes of the limitations described in this Section VI.
VII. COVERAGE UNDER MORE THAN ONE PLAN
If Contributions to the Custodial Account are based on the alternative method
set forth in Section V.(b) above, and the Employee is covered by a retirement
plan controlled, and maintained for him or her, by his or her employer (for
example, a state-wide plan for teachers), both the Employer's plan and the
Custodial Account must be considered to be one plan in order to determine
whether the limitations on contributions and benefits imposed by the Code will
be exceeded.
The First Investors Corporation Custodial Account is considered to be a Defined
Contribution Plan. If the other plan(s) under which the Employee is covered is
(are) also Defined Contribution Plans, the Annual Addition under all such plans
(including the Custodial Account) for any taxable year may not exceed the lesser
of 25%
<PAGE>
of the Employee's compensation or $30,000 (or, if greater, 1/4 of the
dollar limitation in effect for defined benefit plans).
The term "Annual Addition" means the sum for any year of (a) Employer
Contributions, (b) Employee Contributions and (c) forfeitures. All Contributions
to the Custodial Account are considered under the Code to be Employer
Contributions even if derived through a salary reduction arrangement. Moreover,
the Custodial Account does not provide for forfeitures since the Employee's
benefits vest immediately. However, these items must be taken into consideration
to the extent applicable to any other plans maintained by the Employer for the
Employee.
If the other plan(s) under which the Employee is covered is a Defined Benefit
Plan, then the sum of the projected annual benefit under the Defined Benefit
Plan and the Annual Additions under the Defined Contribution Plan (the Custodial
Account) may not exceed an additional overall limitation. This overall
limitation is determined, in general, by computing two factors:
(i) The "Defined Benefit Fraction," which is expressed as the projected annual
benefit under the Defined Benefit Plan as of the end of the year divided by the
lesser of (a) $90,000 (as adjusted for inflation) times 1.25, or (b) 100% of the
Employee's compensation for his or her three highest years times 1.4; and
(ii) The "Defined Contribution Fraction," which is expressed as the total Annual
Additions to the Defined Contribution Plan as of the end of the year divided by
the sum for all years of the employee's service of the lesser for each year of
(a) $30,000 (or if greater, 1/4 of the Defined Benefit limit in effect for the
year) times 1.25 or (b) 25% of the Employee's Compensation for the year or, if
applicable, the special limit for Church Employees discussed in Section V.
above.
The overall limitation is exceeded if the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction exceeds 1.00.
VIII. EXCESS CONTRIBUTIONS AND BENEFITS
The Code imposes penalties on the portion of contributions to the Custodial
Account which exceed the applicable Exclusion Allowance described above ("Excess
Contributions"). Excess Contributions to the Custodial Account are subject to a
6% federal excise tax until
<PAGE>
the excess is eliminated and also are includable in the gross income of the
Employee for federal income tax purposes in the year in which such Excess
Contribution is made. Further, if an Excess Contribution is made, the amount
thereof reduces the Employee's Exclusion Allowance.
Amounts contributed in excess of the $9,500 limit described in Section VI. are
not "Excess Contributions" subject to an excise tax. However, unless such
amounts are distributed as described in Section VI., the Excess Deferral is
includable in the Employee's gross income both in the year contributed, and
again when such amounts are distributed from the Employee's Custodial Account.
IX. DISTRIBUTIONS
Distributions from the Custodial Account are intended to provide a retirement
benefit for the Employee, and accordingly, will be paid after the Custodian has
received notification of the Employee's retirement at normal retirement age,
ordinarily age 65. The Employee's Custodial Account must begin to be distributed
by April 1 of the year following the year in which the Employee attains age 70
1/2 (whether or not the Employee has retired).
However, for an Employee who has reached age 70 1/2 before January 1, 1988 or
for an Employee covered under a governmental plan or a church plan within the
meaning of Section 401(a)(9)(C) of the Code, the required beginning date is
April 1 of the year following the later of the year in which the Employee
attains age 70 1/2 or the year in which the Employee retires.
Distributions from the Custodial Account made as a result of the death of the
Employee must be made over certain time periods as specified in the Code and
Internal Revenue Service regulations. The time period over which benefits must
be paid, because of an Employee's death, depends on the relationship of the
beneficiary to the Employee and whether benefits to the Employee had commenced
prior to his or her death.
Distributions on death will be made to the Employee's designated beneficiary.
In addition to retirement distributions, if the Employee encounters financial
hardship, becomes disabled, separates from the service of the Employer, or
attains age 59 1/2, distributions may be made from the Account. However,
effective January 1, 1989, if a distribution
<PAGE>
is made on account of financial hardship, only the Employee's salary reduction
contributions (and not the income thereon) may be distributed.
Any Eligible Rollover Distribution which is not transferred to an eligible
retirement plan shall be subject to mandatory 20% income tax withholding, in
addition to income taxes and (possibly) a ten percent (10%) early withdrawal
penalty. The Code imposes penalties if the Employee receives distributions from
the Custodial Account before the Employee attains age 59 1/2. A 10% additional
income tax is imposed on the amount of the distribution that is includable in
the Employee's gross income unless the distribution is due to the Employee's
disability, death, part of a series of substantially equal payments over the
Employee's life expectancy or the joint life expectancies of the Employee and
the Employee's designated beneficiary, made on account of the Employee's
separation from service after attainment of age 55, or in certain other limited
instances.
X. FEDERAL TAX TREATMENT
Contributions to the Custodial Account which do not exceed the Exclusion
Allowance and the special limitation on elective salary reduction contributions
are excludable from the gross income of the Employee. Dividends and capital
gains distributions on securities held in the Custodial Account are accumulated
tax-free until distribution of the Account. Distributions from the Custodial
Account are taxed to the Employee under Section 72 of the Code as ordinary
income in the year(s) during which such distributions are received. If all
contributions have been excluded from the Employee's taxable income, the
Employee's cost basis in the Custodial Account is zero and distributions
therefrom will be taxed as ordinary income as received. If any part of the
contributions were taxable to the Employee, which would be the case for example
if the Exclusion Allowance was exceeded, the aggregate amount of all such
taxable contributions comprises the Employee's cost basis. If such an Employee
takes distributions from the Custodial Account in installments, then all of the
installments will include a portion excludable from tax as a return of the
Employee's cost basis.
In the event of the death of an Employee prior to the full distribution of his
or her Custodial Account, the remainder is taxed as income to his or her
beneficiary as received. Like the Employee, however, the beneficiary may exclude
any remaining cost
<PAGE>
basis which the Employee had in the Custodial Account.
Under certain circumstances, a death benefit exclusion is available to the death
beneficiary of an Employee. In such cases, the beneficiaries of the Employee are
entitled to an exclusion of $5,000 (aggregate total for all beneficiaries) for
income tax purposes. If the deceased Employee was a participant in a qualified
trust or annuity plan of the Employer, as well as a participant in the Custodial
Account, the exclusion must be allocated between distributions for both sources.
Section 403(b)(7) was added to the Code by the Pension Reform Act of 1974. No
final regulations pertaining specifically to that section have as yet been
adopted by the Internal Revenue Service. If final regulations are adopted
requiring changes to the First Investors Corporation 403(b) Custodial Account
Agreement, it is the intention of First Investors Corporation to amend the
Agreement to comply with any such regulations.
It should be understood, in addition, that the foregoing discussion of federal
income tax consequences is not exhaustive. Employers desiring to establish the
Custodial Account to provide retirement benefits for Employees should consult
fully with a qualified tax advisor in order to ascertain whether, in light of
any existing retirement plans for their Employees, contributions or benefits
under all such Plans (including the Custodial Account if adopted) will exceed
permissible limits under the Code. Employers and their Employees desiring to
enter into a salary reduction arrangement to fund the Custodial Account should
determine that they are permitted to enter into the salary reduction agreement
and such Employees should carefully determine whether applicable contributions
and benefit limits will be exceeded due to contributions to the Custodial
Account.
XI. DEFINITIONS
(a) "Includable Compensation" means the amount of Compensation received by the
Employee from the Employer named in the Application which is includable in the
Employee's gross income for federal income tax purposes computed without regard
to Section 911 of the Code. Contributions to the Account or to any annuity
contract under Section 403(b) of the Code which are excludable from gross income
are not considered to be "Includable Compensation" for purposes of calculating
the Exclusion Allowance. Section 911 of the Code in certain circumstances
permits exclusion from gross
<PAGE>
income of certain items of income earned outside the United States. However,
where Section 911 permits exclusion from gross income of certain earned income,
these amounts must be included in "Includable Compensation" to determine that
amount of the Exclusion Allowance during any taxable year of the Employee.
(b) "Years of Service." Section 403(b)(4) of the Code requires that in
determining the number of years of service in calculating the "Exclusion
Allowance," there shall be included one year for each full year during which the
Employee was a full-time Employee of the Employer named in the Application. In
determining what constitutes a full year of service, the Employer's annual work
period, and not the Employee's taxable year, is the standard of measurement. For
example, in determining whether a professor is employed full-time, the number of
months of the school academic year is the standard of measurement. If the
Employee has been in the Employer's employ for a period of time shorter than the
Employer's annual work period, the fraction of the year used to calculate the
Exclusion Allowance equals the fraction in which the numerator is equal to the
number of weeks for such year of full-time employment over a denominator which
equals the employer's annual work period. For example, if an Employer's annual
work period is 30 weeks and the Employee has been employed full-time by that
Employer for 15 weeks, for purposes of calculating the years of service factor
of the Exclusion Allowance for that year the Employee is considered, under the
Regulations, to have completed one-half year of service.
In determining whether an Employee is employed full-time, the amount of work
which he or she is required to perform must be compared with the amount of work
which is normally required by Employees holding the same position with the same
Employer and who generally derive the major portion of their personal service
income from such position.
Special rules apply for calculating "Years of Service" for Employees who have
been "part-time" Employees for an entire year or for part of a year. These rules
appear in Section 1.403(b)-1(f)(5) of the Regulations under the Code and should
be consulted with respect to any part-time Employees expected to be covered by
the Custodial Account.
For purposes of calculating the Exclusion Allowance, if the Employee has less
than one year of service, such fraction of a year will be considered one year.
<PAGE>
(c) "Compensation" for purpose of the limitations described in Section IV.
and V. above is defined in Sections 414(s) and 415(c)(3) of the Code, and as
applicable to the Custodial Account means the compensation of the Employee from
the Employer for the year in question. "Compensation" does not include amounts
contributed to the Custodial Account which are currently excludable from gross
income.
WHAT IS A SIMPLIFIED EMPLOYEE PENSION (SEP)?
A Simplified Employee Pension ("SEP") is a retirement plan established by an
employer for its eligible employees. Employees who have not attained age 21 or
who have not worked for the employer in at least three of the immediately
preceding five years may be excluded from participation. Form 5305-SEP is
completed by the employer, and indicates the eligibility requirements for SEP
participation.
The employer takes a deduction on its tax return for the amount contributed.
Employees are not taxed on SEP contributions when they are made. SEP earnings
grow tax-deferred, until withdrawn.
A SEP may be adopted by an employer that satisfies the following conditions:
a. The employer has never maintained a defined benefit plan.
b. The employer currently maintains no other qualified employer retirement
plan.
c. The employer is not part of a group of entities under common control, or
part of an affiliated service group, as such terms are defined by the Internal
Revenue Code, unless all eligible employees of such related business entities
participate in the SEP.
d. The employer does not utilize any leased employees, as defined by the
Internal Revenue Code.
Certain other requirements may apply.
Establishing a SEP is easy. The employer completes Form 5305-SEP, and remits the
completed and signed form, a check, and Schedule A (which shows each
participant's allocation of the employer's total contribution) to Administrative
Data Management Corp. SEP-IRA Applications (on page 10) are completed by the
eligible employees and are filed along with the Form 5305-SEP, a check and
Schedule A. The employer is required to provide participants with a copy of the
filed Form 5305-SEP, including the instructions and attached questions and
answers.
A separate account is maintained for each SEP participant.
SEP contributions are only made by the employer and do not reduce the employee's
salary or other compensation. The employer decides whether to make a SEP
contribution each year. The SEP contribution must be made as a uniform
percentage of all eligible employees' compensation. No participant may have an
amount allocated to his or her SEP account in any year which exceeds the lesser
of $30,000.00 or 15% of the participant's compensation. In the event that a
SARSEP is also adopted, between the salary reduction contributions made to the
SARSEP and SEP contributions made by the
<PAGE>
employer, the same overall limitation (the lesser of $30,000.00 or 15% of
compensation per participant) applies to the total SEP and SARSEP contribution
allocation each year for each SEP participant. "Compensation, for SEP
contribution purposes, may not exceed $150,000 (for 1994).
Once a SEP contribution is made for the employee, the individual is completely
vested in the contribution and the SEP account then operates in the same manner
as an IRA. As such, the employee can withdraw SEP monies at any time and
consistent with IRA rules, a 10% penalty tax, in addition to ordinary income
taxes, can apply if a premature withdrawal is taken. Please refer to the IRA
Custodial Agreement and Disclosure Statement for the rules on early
distributions and IRA distribution requirements in general.
The SEP is a beneficial plan for both the employer and its employees. It
combines the flexibility and discretion found in profit sharing plans, with the
control and easy administration applicable to Individual Retirement Accounts.
The above summary is meant to highlight and explain the major characteristics of
a SEP, and is not meant to be exhaustive. An employer should consult with its
own tax advisors before adopting a SEP. Please read Form 5305-SEP, its
instructions, questions and answers for more complete details regarding your
First Investors SEP.
WHAT IS A SALARY REDUCTION SEP (SARSEP)?
A SARSEP, or salary reduction SEP, is a SEP under which an employee can elect to
defer a portion of his or her salary into the SARSEP plan. Employees who have
not attained age 21 or who have not worked for the employer in at least three of
the immediately preceding five years may be excluded from participation. Form
5305A-SEP is completed by the employer, and indicates the eligibility
requirements for SARSEP participation. No current income tax is imposed on the
salary reduction contribution, and the earnings within the SARSEP accumulate on
a tax-deferred basis until withdrawn.
A SARSEP may be adopted by an employer that satisfies the following conditions:
a. The employer had 25 or fewer employees in the immediately preceding year
who were eligible to participate.
b. The employer has never maintained a defined benefit plan.
c. The employer currently maintains no other qualified employer retirement
plan.
d. At least 50% of the employer's eligible employees elect to have amounts
contributed from their salaries into the SARSEP.
<PAGE>
e. The employer has at least one employee who is not a "Highly Compensated
Employee" as such term is defined by the Internal Revenue Code.
f. The employer is not part of a group of entities under common control, or
part of an affiliated service group, as such terms are defined by the Internal
Revenue Code, unless all eligible employees of such related business entities
are eligible to participate in the SARSEP and no more than 25 employees in the
aggregate are eligible to participate.
g. The employer is not a state or local government or a tax-exempt
organization.
Certain other requirements may apply.
Pursuant to a salary reduction agreement between the employer and employee,
employees elect to contribute a portion of their salaries into the plan. The
maximum annual salary reduction contribution for each employee is $9,240.00 (for
1994), or if less, 15% of the employee's compensation. The employer may be
required to make "top-heavy" contributions to the SARSEP. This is discussed
later in this summary.
Similar to a SEP, under a SARSEP the employer completes Form 5305A-SEP, and
files it, along with the total contribution and Schedule B (which shows each
participant's contribution), with Administrative Data Management Corp. Each
eligible employee completes a SARSEP-IRA Application, which should also be filed
with Administrative Data Management Corp. Similar to the SEP, individual
SARSEP-IRA accounts are maintained for all SARSEP participants. The employer is
required to provide participants with a copy of the filed Form 5305A-SEP,
including the instructions and attached questions and answers.
A SARSEP is similar to a 401(k) plan that the benefits are primarily funded by
salary reduction, pre-tax contributions made by the participants. Similar to
401(k) plans, there is a discrimination test for SARSEP contributions, which can
limit the salary reduction deferrals made by "highly compensated employees", and
which is described in Form 5305A-SEP. SARSEP's which satisfy the discrimination
test are easy to administer, and there are no Form 5500 reporting requirements.
When a "key employee", as such term is defined by the Internal Revenue Code,
makes a salary deferral contribution into the SARSEP, the SARSEP is deemed to be
"top-heavy". Generally, this requires that the employer make a 3% (or, if less,
the highest percentage deferral made by a key employee) contribution for all
non-key employees who are eligible to participate in the SARSEP.
You will find the SARSEP to be a vehicle under which employees can save for
their retirement, while benefiting from the reduction in their taxes (because
their contributions reduce their taxable
<PAGE>
salaries), as well as the tax-deferred growth of their SARSEP accounts. The
SARSEP is unique, in that it allows employees to fund (to a large degree) their
own retirement benefits, control, (and vary, if desired) the amounts
contributed, and have access to their SARSEP account.
The above summary is meant to highlight and explain the major characteristics of
a SARSEP, and is not meant to be exhaustive. An employer should consult with its
own tax advisors before adopting a SARSEP. Please read Form 5305A-SEP, its
instructions, and attached questions and answers for more complete details
regarding your First Investors SARSEP.
DISCLOSURE STATEMENT INDIVIDUAL RETIREMENT ACCOUNT
1. INTRODUCTION
This Disclosure Statement is distributed to you in accordance with Internal
Revenue Service regulations and is intended to provide you with a concise
explanation of the rules applicable to your Individual Retirement Account (IRA).
WE URGE YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY PRIOR TO ESTABLISHING AN
IRA. Due to the unfavorable tax consequences which may result from the improper
establishment of an IRA, you may wish to confer with your attorney or other
qualified tax advisor if you would like specific advice regarding your IRA. In
addition, further information can be obtained from any district office of the
Internal Revenue Service. The Tax Reform Act of 1986 (TRA) enacted many changes
to the rules governing IRAs. This Disclosure Statement contains a general
explanation of the TRA changes, which are generally effective for tax years
beginning after 1986. Because the Internal Revenue Service has not issued final
regulations with respect to some of the TRA changes or with respect to certain
other statutory provision, First Investors Corporation reserves the right to
amend the IRA governing instruments and this Disclosure Statement to comply with
any such subsequently issued regulations or applicable laws. The following is a
discussion of the statutory requirements and tax rules governing IRAs.
Additional information can be found in I.R.S. Publication 590, "Individual
Retirement Arrangements".
2. REVOCATION PROCEDURE
If your IRA is established on the date you receive this Disclosure Statement, or
within seven (7) days thereafter, you may revoke your IRA, for any reason and
without penalty, within seven (7) days after it is established. If your IRA is
established more than seven (7) days after the date you receive this Disclosure
Statement, it may not be revoked. If you should choose to revoke your IRA, the
entire amount of your contribution will be refunded without adjustment for
administrative expenses or any other amount. In order to revoke your IRA, you
must mail or deliver a written notice of revocation to:
<PAGE>
First Investors
c/o Administrative Data Management Corp.
Attn: ADM Services Department
581 Main Street
Woodbridge, New Jersey 07095-1198
If mailed, the revocation notice shall be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at
1-800-423-4026 if you have any questions with respect to this procedure.
Generally, your initial contribution is invested in fund shares on the date of
receipt; however, in the case of a large contribution, Administrative Data
Management Corp. reserves the right not to invest such contribution in fund
shares until the 7th day after it is received.
3. IRA REQUIREMENTS
An Individual Retirement Account is a trust created or organized in the United
States for the exclusive benefit of an individual or his or her beneficiaries.
The written instrument creating the trust must satisfy the following
requirements:
1. Except in the case of a rollover contribution and trustee to trustee
transfer (explained below), contributions must be in cash and may not exceed
$2,000 on behalf of any individual;
2. The trustee must be a bank or such other person as approved by the
Secretary of the Treasury;
3. No part of the trust funds may be invested in life insurance contracts;
4. The interest of an individual in an IRA must be nonforfeitable;
5. The assets of the trust may not be commingled with other property except
in a common trust fund or common investment fund; and
6. IRAs must be distributed in accordance with certain rules (explained
below).
Your First Investors IRA is a custodial account which is treated as a trust for
these purposes under the Federal tax laws.
4. ELIGIBILITY
You are eligible to establish an IRA for any year in which you work and receive
compensation for such work, provided that you have not attained age 70 1/2 in
the year in question. If eligible, both a
<PAGE>
husband and wife may each have their own separate IRA. If either spouse is
ineligible to establish an IRA, the other spouse may be permitted to establish a
Spousal IRA.
"Compensation" includes wages, salaries, professional fees, and other amounts
received for personal services actually rendered, including such items as
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses.
Compensation also includes earned income of a self-employed person and any
amount includable in an individual's income as alimony or separate maintenance
payments. Compensation does not include amounts derived from or received as
earnings or profits from property, such as interest, dividends and rent, or any
amount not includable in gross income.
You may have an IRA whether or not you are a participant in any other retirement
plan. However, if you or your spouse are an active participant in another
retirement plan the amount of your annual contribution which is tax deductible
may be reduced. Please refer to Section 5 for assistance in determining the tax
deductible amount of your annual contribution.
5. CONTRIBUTIONS
A. Deductible Contributions
You may make an annual contribution to your IRA up to a maximum of $2,000 (or
$2,250 for a Spousal IRA) or 100% of your compensation, whichever is less. If
neither you nor your spouse is an "active participant" in an employer maintained
retirement plan at any time during the year, the entire amount of your
contribution will be tax deductible. If either you or your spouse is an active
participant in an employer maintained retirement plan, but you have adjusted
gross income (AGI) below a certain level (explained below), your entire
contribution will be tax deductible. However, if either you or your spouse is an
active participant and your AGI is above the applicable dollar level, the amount
of your contribution which is tax deductible may be reduced or eliminated.
An exception applies in the case of a husband and wife who lived apart at all
times during the year and filed separate tax returns for the year: They are
treated as not married for the year for purposes of the active participation
rules.
In order to be deductible for a taxable year, annual contributions must be made
not later than the due date (without regard to extensions) of your tax return
for the year for which the deduction is claimed. Annual contributions may be
made in one or more payments, by check or money order payable to First Investors
Corporation. The minimum payment which may be made is the minimum amount
required for investment in the fund shares which you select for investment of
your contributions. The money earned on your investment will be automatically
reinvested, and is not taxable to
<PAGE>
you until the year in which you actually receive it.
You are an "active participant" for a year if you are covered by any of the
following retirement plans:
1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");
2. An annuity plan described in Section 403(a) of the Code;
3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);
4. An annuity contract or custodial account described in Section 403(b) of
the Code.
5. A simplified employee pension (SEP) described in Section 408(k) of the
Code;
6. A trust described in Section 501(c)(18) of the Code.
You are covered by a retirement plan for a year if your employer or union has a
retirement plan under which money is added to your account or you are eligible
to earn retirement credits. you are an active participant for a year even if you
are not yet vested in your retirement benefit. Also, if you make required
contributions or voluntary employee contributions to a retirement plan, you are
an active participant. In certain plans, you may be an active participant even
if you were only employed for part of the year. Starting with the 1987 tax year,
your Form W-2 should indicate your active participant status.
You are not considered an active participant if you are covered by a plan only
because of your service as (1) an Armed Forces Reservist, for less than 90 days
of active service; or (2) a volunteer fire fighter covered for fire fighting
service by a government plan, and your accrued benefit under such plan as of the
beginning of the year is not more than an annuity of $1,800 per year payable at
age 65. Of course, if you are covered by any other plan, these exceptions do not
apply.
If you would like specific advice as to whether you are an active participant in
a retirement plan, you should consult with your attorney or other qualified tax
advisor.
If you or your spouse is an active participant, you must calculate your adjusted
gross income (AGI) for the year (if you and your spouse file a joint tax return,
you must use your combined AGI) to determine whether your IRA contribution will
be deductible.
Your tax return will show you how to calculate your AGI for this purpose. If
your AGI is at or below a certain level, called the
<PAGE>
"Threshold Level," you are treated as if you were not an active participant and
you can make a deductible contribution under the same rules as a person who is
not an active participant.
If you are single (or married but treated as single under the exception
described above), your AGI Threshold is $25,000. If you are married and file a
joint tax return the Threshold Level is $40,000. If you are married but file a
separate tax return, the Threshold Level is $0.
If your AGI is less than $10,000 above your Threshold Level, you will still be
able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level is called your Excess AGI.
The maximum allowable deduction is $2,000 (or $2,250 for a Spousal IRA). you may
calculate your deduction limit by using the following formula:
$10,000 - Excess AGI x Maximum Allowable = Deduction
- -------------------- Deduction Limit
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in 0). For example, if the result is $1,525, you must round it
up to $1,530. If the final result is below $200 but over 0, your deduction limit
is $200. Your deduction limit cannot, in any event, exceed 100% of your
compensation.
The following examples illustrate the above formula.
Example One: Mr. Smith, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. He has contributed $2,000 to
his IRA for the current year. Mr. Smith wishes to calculate the deductible
portion of his IRA contribution. He must first determine the amount of his
Excess AGI. Excess AGI is equal to AGI minus the Threshold Level. Since Mr.
Smith is a single individual his Threshold Level is $25,000. Thus, his Excess
AGI is $3,000 ($28,000-$25,000). Mr. Smith will determine his deduction limit as
follows:
$10,000 - $3,000 x $2,000 = $1,400
- ----------------
$10,000
Example Two: Mr. and Mrs. Jones are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Mr. Jones is not covered by any other
retirement plan. Mrs. Jones is an active participant in her employer's
retirement plan. Mr. and Mrs. Jones have each contributed $2,000 to their
separate IRAs. The maximum allowable deduction for each spouse is $2,000. Mr.
and Mrs. Jones wish to calculate the deductible portion of their IRA
contributions. Mr. and Mrs. Jones must first determine the amount of their
Excess AGI. Since they are a married couple filing a joint return the Threshold
Level is $40,000. Thus, their Excess AGI is $5,000 ($45,000-$40,000). Mr. and
Mrs. Jones will each determine their individual deduction limit as follows:
<PAGE>
$10,000 - $5,000 x $2,000 = $1,000
- ----------------
$10,000
Mr. and Mrs. Jones will therefore be able to claim a total deduction of $2,000
on their joint income tax return.
B. Non-Deductible Contributions
Even if your deduction is less than $2,000 ($2,250 for a Spousal IRA), you may
still contribute to an IRA up to the lesser of 100% of your compensation or
$2,000 ($2,250 for a Spousal IRA). The amount of your contribution which is not
deductible will be treated as a non-deductible contribution to your IRA. You may
also choose to treat a contribution as non-deductible even if you could have
deducted part of all of the contribution. Interest or other earnings on your IRA
contribution, whether from deductible or non-deductible contributions, will not
be taxed until distributed to you from the IRA.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your individual income tax return, you must then determine how much of your
contribution is deductible. If you determine that all or a portion of your
contribution is non-deductible, you must report such amount to the IRS on Form
8606 as part of your tax return for the year. If you fail to file Form 8606, you
may be subject to a penalty of $50. If you overstate the amount of the
non-deductible contribution, you may be subject to a penalty of $100.
C. Spousal IRA Contributions
If you and your spouse file a joint income tax return and your spouse either has
no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make IRA contributions on behalf of yourself and your spouse
for a given tax year, the aggregate amount of the contributions to both your IRA
and your spouse's IRA may not exceed the lesser of $2,250 or the amount of your
compensation for such year. The contribution does not have to be split equally
between the IRAs belonging to you and your spouse. However, the total
contributions to either of your IRAs may not exceed $2,000.
If you are unable to make contributions to your IRA because you have attained
age 70 1/2, you may nevertheless continue to make contributions to your
non-working spouse's IRA until the year in which your spouse reaches age 70 1/2.
D. Excess Contributions
If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever, is applicable, such amount is
<PAGE>
an "excess contribution." A non-deductible 6% excise tax is imposed upon such
excess contribution for the year in which it is made and also for each following
year until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the date for filing your federal income tax
return for the year for which the excess contribution is made. The earnings
attributable to the excess contribution must also be withdrawn and must be
included in your gross income in the year for which the excess contribution was
made. A timely withdrawal of the excess contributions will permit you to avoid
not only the 6% excise tax but also the 10% penalty tax on premature
distributions. A withdrawal of an excess contribution after the tax return
filing date will avoid the 10% penalty tax on premature distributions, provided
that the total contribution for the year did not exceed $2,250 and no deduction
was allowed for the excess contribution.
As an alternative to withdrawing such excess contribution, you may eliminate
such excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excess tax
until the excess contribution is completely eliminated.
E. SEP-IRA Contributions
If your IRA is part of a Simplified Employee Pension (SEP-IRA) established by
your employer (or by you if you are self-employed), the maximum amount which may
be contributed on your behalf may be greater than the general maximum IRA
limitations on contributions, described above.
The maximum amount which may be contributed on your behalf to a SEP-IRA is the
lesser of (i) 15% of your compensation for the year (if you are self-employed,
your "earned income" after taking into account the SEP-IRA contribution and tax
deduction allowed under Internal Revenue Code Section 164(f) or (ii) $30,000. In
addition, your employer may establish a type of SEP-IRA (a "SARSEP") which would
allow you to make elective contributions to your IRA of up to $9,240 per year,
subject to the same 15% and $30,000 limits. (The elective contribution limit is
adjusted by the Internal Revenue Service.)
Amounts contributed to a SEP-IRA within the above limits are excluded from your
income for Federal income tax purposes until such amounts are distributed to
you. Amounts distributed to you from a SEP-IRA are taxed in the same manner as
distributions from other IRAs.
If you are a participant in a SEP-IRA, your employer is required to give you a
copy of the SEP-IRA documents, including certain explanatory materials
concerning the Federal income tax rules for
<PAGE>
SEP-IRAs, and inform you each year of the amounts (if any) contributed on your
behalf.
6. ROLLOVER CONTRIBUTIONS
A rollover is a tax free transfer of cash or other assets from one retirement
program to another. There are two types of rollover contributions to an IRA. The
first type involves the transfer from one IRA to another IRA. The second type
involves the transfer of assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan to an IRA. A rollover contribution
is neither includable in your income nor deductible. Unlike annual
contributions, rollover contributions are not subject to the yearly $2,000 (or
$2,250 in the case of the Spousal IRA) or 100% of compensation limitation.
A. IRA to IRA Rollover and Trustee to Trustee Transfer
In order to qualify for tax-free treatment you must make a rollover contribution
from one IRA to another IRA within 60 days after you receive the distribution
from the first IRA. In addition, if the assets distributed from your IRA are
property other than cash, the identical property must be contributed to your new
IRA in order to qualify as a rollover contribution. 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. Amounts not rolled over may also be
subject to the 10% penalty tax on premature distributions.
Rollovers between IRAs are allowed only once a year. The one year period begins
on the date that you receive the IRA distribution and not on the date it is
rolled over into another IRA. A rollover from one IRA to another should not be
confused with a transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee (trustee to trustee transfer). This is not
considered a rollover and, consequently, is not affected by the limitation on
rollovers to once a year.
In order to qualify for tax-free treatment, it is not necessary to rollover the
entire amount of the distribution which you receive. It is permissible for you
to rollover a portion of the distribution and to keep the remainder. However,
the amount you retain will be taxed in the year of receipt as ordinary income.
In addition, the amount retained may be subject to the 10% tax on premature
distributions.
B. Retirement Plan to IRA Rollover
You may also be eligible for tax-free rollover treatment when you receive a
distribution from a tax-sheltered annuity or custodial account or from your
employer's qualified retirement plan. For retirement plan distributions paid to
you before January 1, 1993, in order to qualify for tax-free rollover treatment
a distribution from a qualified retirement plan must constitute either a
<PAGE>
"qualified total distribution" or "partial distribution".
A "qualified total distribution" means one or more distributions:
(i) which are paid to you within a single taxable year on account of the
termination of your employer's qualified plan, or in the case of a profit
sharing or stock bonus plan, a complete discontinuance of contributions;
(ii) which constitute a "lump sum distribution" within the meaning of the
Internal Revenue Code; or
(iii) which constitute a distribution of your accumulated deductible employee
contributions.
In order for a qualified total distribution to be eligible for tax-free rollover
treatment, such distribution must be transferred to an IRA within 60 days of the
date you receive it. In addition, if such distribution consists of property
other than money, the identical property must be transferred to your IRA in
order to qualify as a rollover contribution. However, you are permitted to sell
the property and transfer the proceeds of the sale to the IRA within 60 days of
receipt of the distribution. In order to be eligible for tax-free treatment, it
is not necessary to roll over the entire qualified total distribution. In fact,
you are not permitted to roll over any after-tax employee contributions which
you have made to your employer's qualified retirement plan. However, the earning
attributable to such after-tax contributions may be rolled over. Any portion of
a qualified total distribution which you retain, except your own after-tax
contributions, will be subject to current income tax.
If you receive a qualified total distribution from your employer's plan and roll
over part or all of it into an IRA, you may later roll over those asset into a
new employer's plan (if the plan permits you to do so). Under such
circumstances, your IRA serves as a holding account or conduit for those assets.
However, you may roll over those assets into another qualified employer's plan
only if they consist of funds received from the first employer's plan and
earnings on those funds, and you did not mix other IRA contributions or funds
from other sources with them.
If you receive a "qualified total distribution," within the meaning of the
Internal Revenue Code, from a Section 403(b) annuity or custodial account you
may also make a tax-free rollover to an IRA if such distribution is transferred
to an IRA within 60 days after you receive it.
The term "partial distribution" means a distribution during a single tax year
which represents at least 50% of the balance due you from a qualified retirement
plan or tax-sheltered annuity or custodial account and which is paid to you:
(i) Because you separated from service with the employer;
<PAGE>
(ii) Because you became disabled while working for the employer; or
(iii) Because of the death of your spouse while he or she was covered under the
plan and you are named as the beneficiary.
You may elect to roll over tax-free, all or part of a partial distribution from
a qualified plan or a tax-sheltered annuity or custodial account into an IRA.
Such rollover must occur within 60 days of the receipt of such partial
distribution in order to qualify for tax-free treatment. A rollover of a partial
distribution should not be confused with partial rollovers of a total
distribution from an employer's qualified plan. If you roll over a partial
distribution from a qualified plan, you will lose the ability to use special
income averaging on subsequent distributions from the qualified plan.
In order to properly roll over a qualified total distribution or partial
distribution you must make a rollover election, by designating in writing, to
the trustee of the IRA that such amount is to be treated as a rollover
contribution.
If you receive a distribution from your spouse's employer's retirement plan
pursuant to a "qualified domestic relations order", you may be eligible to make
a tax-free rollover to an IRA. In order to obtain tax-free treatment, the
balance to your credit under the retirement plan must be paid or distributed to
you within one taxable year. You may rollover any portion of the cash or
property received in such distribution to an IRA. In the case of a distribution
of property other than cash, the property received must be rolled over.
For retirement plan distributions payable to you on or after January 1, 1993,
any eligible rollover distribution, as defined by the Unemployment Compensation
Amendment of 1992, may be rolled over into an IRA or other eligible retirement
plan. Your employer is required to provide you with a notification after you
terminate employment which explains the new rollover rules.
First Investors Corporation (including its affiliates), Administrative Data
Management Corp. and First Financial Savings Bank, S.L.A. takes no
responsibility, nor assumes any liability for any rollover made by you which
does not qualify as a tax-free rollover under the Internal Revenue Code. Since
penalty taxes may be imposed (in addition to other possible negative tax
consequences) when invalid rollovers are made to an IRA, please consult with
your tax advisor to ensure that any rollover is made in the appropriate manner.
7. DISTRIBUTIONS
For taxable years beginning after 1984, the IRA distribution rules are similar
to the rules for distributions from qualified retirement plans, pursuant to
regulations to be issued by the
<PAGE>
Secretary of the Treasury. Proposed regulations were issued on July 24, 1987
relating to required distributions from IRAs. This Disclosure Statement does not
discuss the proposed regulations. If you would like specific advice regarding
the proposed regulations you should confer with your attorney or other qualified
tax advisor.
Your IRA is intended to provide a source of income to you after attainment of
age 59 1/2 or if you become disabled. Distributions other than amounts rolled
over into another IRA or qualified plan are taxed as ordinary income in the year
receive by you. With certain exceptions, distributions which occur prior to age
59 1/2 will be subject to a 10% additional tax on premature distributions.
Please refer to Section 8 for a discussion of the distributions occurring prior
to age 59 1/2 which are not subject to the 10% tax.
While distributions from your IRA may commence without penalty for early
withdrawal at any time after you attain age 59 1/2, distributions must commence
on or before the first day of April of the year following the year in which you
attain age 70 1/2. Distributions must be paid to you in accordance with one of
the following methods:
(i) A single lump sum payment; or
(ii) Substantially equal monthly, quarterly, semi-annual, or annual payments
over a period certain not extending beyond your life expectancy or the joint and
last survivor expectancy of you and your designated beneficiary.
Other distribution methods may be available.
Notwithstanding that distributions may have commenced pursuant to option (ii)
above, you may receive a distribution in the balance in your IRA at any time.
Distributions also must meet certain minimum distribution requirements. Either
the entire interest in your IRA must be distributed before April 1 following the
year you attain age 70 1/2 or payments must be made over a period no greater
than your life expectancy or over the life expectancy of you and your designated
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 50% tax may be waived by the Internal Revenue Service.
At the time that you establish your IRA you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right
prior to the complete distribution of your IRA to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate shall
be treated as
<PAGE>
your designated beneficiary. If you should die after the distribution of your
IRA has commenced, the remaining portion of your IRA must continue to be
distributed as least as rapidly as under the method of distribution being used
prior to your death. If you should die before the distribution of your IRA has
commenced, your entire interest in your IRA must be distributed in accordance
with one of the following provisions:
(i) The entire balance of your IRA is distributed within five (5) years after
your death;
(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments over the
life expectancy of such beneficiary commencing no later than one (1) year after
your death;
(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive substantially equal periodic payments over his or her life
expectancy, commencing at any date prior to the date on which you would have
attained age 70 1/2;
(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his or her own IRA and receive distributions under
the general distribution rules discussed above. In addition to the distributions
described above, you may also receive a distribution from your IRA for the
purpose of transferring the assets into another individual retirement account,
individual retirement annuity, or, when eligible, to a qualified retirement
plan. A rollover distribution is not taxable to you provided that it is properly
redeposited within 60 days of receipt. Furthermore, any required distributions
may not be rolled over. Please refer to Section 6 for a discussion of the
requirements which must be satisfied in order to qualify for tax-free rollover
treatment.
8. TAX TREATMENT OF DISTRIBUTION
A. Income Tax
As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA, the
portion of your IRA distribution consisting of non-deductible IRA contributions,
each distribution from your IRA will consist of a nontaxable portion (return of
non-deductible contributions) and a taxable portion (return of deductible
contributions, if any, and earnings). Thus you generally may not take a
distribution which is entirely tax free. The following formula is used to
determine the nontaxable portion of your distributions for a tax year:
<PAGE>
Non-deductible
Contributions x Total Distribution = Nontaxable
- -------------- (for the year) Distributions
Year end IRA (for the year)
Balance
+ total distribution
(for the year)
The following illustrates how you will determine the nontaxable portion of your
distributions for a taxable year.
Example: Ms. Gray has made the following contributions to her IRA:
YEAR DEDUCTIBLE NON-DEDUCTIBLE
- ---- ---------- --------------
1984 $2,000 $0
1985 $2,000 $0
1986 $2,000 $0
1987 $1,000 $1,000
1988 $0 $2,000
------ ------
$7,000 $3,000
During 1989, Ms. Gray receives a $1,000 distribution from her IRA. On December
31, 1989 the total value of Ms. Gray's IRA is $14,000. The nontaxable portion of
the distribution she received during 1989 is determined as follows:
$3,000 x $1,000 =$200
- ---------------
$14,000 + 1,000
To determine your year end IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as simplified employee
pension (SEP) IRAs, and rollover IRAs. You also add back the distributions taken
during the year.
A single lump sum distribution from your IRA is not entitled to ten year
averaging, five year averaging or capital gains treatment accorded lump sum
distributions from a qualified plan.
B. Early Withdrawal Tax
In general, distributions from your IRA which occur prior to you attaining age
59 1/2 will be subject to adverse tax consequences. Not only will such
distributions be fully taxable to you as ordinary income, such distributions
will also be subject to a 10% additional tax.
In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death,
disability and divorce will be exempt from the 10% additional tax. You are
considered disabled if you are "unable to engage in any substantial gainful
activity because of a medically determinable physical or mental impairment which
can be expected to result in death or to be of long, continued, and indefinite
duration." In addition, distributions before age 59 1/2 are not subject to the
10% tax if made in the form of substantially equal
<PAGE>
periodic payments and are made over your life expectancy or the joint life
expectancies of you and your designated beneficiary.
C. Excess Distributions Excise Tax
A 15% excise tax is imposed on annual distributions from IRAs and other
tax-favored retirement arrangements to the extent that such distributions in the
aggregate exceed $150,000 during any year. For certain qualifying "lump-sum
distributions" the threshold amount, above which the excise tax is applied, is 5
times the applicable threshold for annual distributions. A similar tax is
imposed upon your estate if you die with "excess accumulations". There are
special rules which may apply if you had substantial (greater than $562,500)
total accrued retirement benefits as of August 1, 1986 and you made a special
election ("grandfather" election) by the due date of your 1988 Federal income
tax return. You should discuss these matters with your tax advisor.
D. Gift Tax
Your designation of a beneficiary for your IRA will not be treated as a gift and
will not subject you to Federal gift taxes.
E. Estate Tax
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.
9. PROHIBITED TRANSACTIONS
You or your beneficiary may not participate in any transaction with your IRA
which is prohibited by law. Such "prohibited transactions" include but are not
limited to:
(i) the sale, exchange, or lending of any property;
(ii) lending of money or other extension of credit;
(iii) furnishing of goods, services, or facilities;
(iv) the use of income or assets of the IRA by you or your beneficiary; and
(v) the use of your IRA as security for a loan.
If such transactions are engaged in, your IRA will be disqualified and will lose
its tax-exempt status. Under such circumstances, your IRA will be considered to
have been distributed to you and will be subject to the income and additional
taxes discussed above.
10. REPORTING REQUIREMENTS
If a transaction has occurred upon which a special penalty tax is imposed, such
as an excess contribution, a premature distribution
<PAGE>
or a failure to make a timely distribution, you are required to file Form 5329
with your annual income tax return for such year. Form 5329 need not be filed if
the only activity for the year is the making of contributions or the
distribution of permissible benefits.
11. IRS APPROVAL
This IRA is a model IRA which follows the approved document considered by the
Internal Revenue Service to meet the applicable requirements of the Internal
Revenue Code. Therefore, the Internal Revenue Service will not issue a formal
determination as to the qualified status of your IRA. Further information can be
obtained from any office of the Internal Revenue Service.
Please be aware that the Internal Revenue Service's approval is a determination
only as to the form of the IRA and does not represent a determination as to the
merits of the IRA.
12. IRA BALANCE
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon the market values of the securities in the
mutual fund investment portfolio, which are subject to fluctuations; therefore,
growth in the value of your IRA cannot be projected or guaranteed. Dividends
from net investment income and capital gains distributions paid by the mutual
funds selected will be reinvested in fund shares at the applicable reinvestment
price as of the respective reinvestment dates and such additional shares will be
credited to your IRA.
13. FEES, CHARGES and COMMISSIONS
A. IRA Custodian Fees
The Custodian of your IRA charges $7.00 for each distribution other than
periodic cash payments; and $1.00 for each periodic cash payment. These fees are
applicable regardless of the manner in which your IRA is funded. The Custodian
reserves the right to waive any of its fees at any time and to revise its fee
schedule upon written notice to the IRA holder.
B. Mutual Fund Commissions
If you fund your IRA by the direct purchase of Class A mutual fund shares, a
maximum sales commission of 6.25% of the offering price may be charged. Class A
commissions range from 6.25% to 1.5% of the fund's offering price. Reduced Class
A share commissions apply for purchases of more than $25,000 under the fund's
rights of Accumulation Privilege or a Letter of Intent. If you fund your IRA by
the direct purchase of Class B shares, purchases will be transacted at the
fund's net asset value and a contingent deferred
<PAGE>
sales charge may be imposed upon redemption of such shares.
CUSTODIAL AGREEMENT
INDIVIDUAL RETIREMENT ACCOUNT
FORM 5305-A
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), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)). 2. No part of the custodial funds may be invested in
collectible (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
<PAGE>
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
<PAGE>
year of the Depositor's death. If, however, the beneficiary is the Depositor's
surviving spouse, then this distribution is not required to begin before
December 31 of the year in which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the requirements
of section 408(b)(3) and its related regulations has irrevocably commenced,
distributions are treated as having begun on the Depositor's required beginning
date, even though payments may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been distributed
and if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
5. In the case of 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.
<PAGE>
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 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.
ARTICLE VIII
1. By execution of the First Investors Individual Retirement Account Application
(the "Application"), the individual named therein (the "Depositor") has applied
for an Individual Retirement Account (the "Account") described in Section 408(a)
of the Internal Revenue Code of 1986 (the "Code") in order to provide for his or
her retirement and for the support of his or her beneficiaries after death. The
Custodian, by executing the Application, has established an Account for the
Depositor and has accepted its appointment as Custodian of the account. The
Depositor and the Custodian hereby agree that the Account shall be governed by
the provisions of the Agreement and the Application which is made a part hereof.
The Account is created for the exclusive benefit of the Depositor and his or her
beneficiaries.
2. (a) Annual contributions must be made in cash by check or money order payable
to "First Investors Corporation" and may be made in one or more payments;
provided, however, that no such payment shall be smaller in amount than the
minimum amount, if any, required for investment in the securities of the
Designated Investment Company. The Custodian shall have no obligation to compel
the Depositor to make any contribution, nor shall it be required to notify the
Depositor of the existence or amount of an "excess contribution", if any, as
that term is defined in Section 4973(b) of the Code. Annual contributions may be
made to the Account for the benefit of the Depositor by his or her employer.
(b) Contributions which qualify as "rollover contributions" described in Section
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code may be made
to the Account; provided, however, that such contributions consist solely of
cash (made by check or money order payable to "First Investors Corporation") in
an amount no smaller than the minimum amount, if any, required for investment in
the securities of the Designated Investment Company, and/or securities of a
Designated Investment Company. The
<PAGE>
Depositor shall identify rollover contributions as such in writing and the
Custodian shall rely on such identification. A contribution identified in
writing by the Depositor as a rollover contribution from a qualified retirement
plan shall not constitute an Account separate from any Account established
hereunder to which annual contributions have been or will be made, unless the
Depositor instructs the Custodian otherwise.
3. The Custodian shall maintain a record of the Account for the Depositor
reflecting his or her contributions, the investment thereof, and any accretions
upon such investments.
4. (a) The Custodian shall invest all such cash contributions less unpaid
custodial fees in the securities of the Designated Investment Company specified
by the Depositor in the Application and the Custodian or its nominee shall be
the holder of record, and the Depositor shall be the beneficial owner of all
such securities and any other property in the Account. The term "Designated
Investment Company" shall mean a registered investment company of the open-end
management type or unit investment trust type, the securities of which are
sponsored, distributed and/or underwritten by First Investors Corporation,
provided however, that the purchase of a Periodic Payment Plan with insurance
shall not be permitted. The Depositor (or following the death of the Depositor,
his or her beneficiary) may, by instructions given to the Custodian, determine
the investment in which his or her Account is to be invested or reinvested at
any time and from time to time. The Depositor must provide specific instructions
for specific purchases, sales, exchanges, and other transactions. By giving such
instructions to the Custodian, the Depositor will be deemed to have acknowledged
receipt of the prospectus, if any, for any shares or other investment vehicles
in which the Depositor directs that the Custodian invest assets in his or her
Account. The Custodian shall be responsible for executing such instructions
promptly; provided, however, that neither the Custodian, the transfer agent,
Administrative Data Management Corp., nor any affiliated company shall be
obligated to invest any portion of the Depositor's initial contribution to his
or her Account until seven (7) calendar days have elapsed from the date of
acceptance of the application or agreement by or on behalf of the Custodian.
Investments held in the Account may be divided between or among more than one
Designated Investment Company.
(b) All cash dividends and capital gains distributions received upon assets in
the Account shall be reinvested in the securities of the Designated Investment
Company and credited to the Account. In the event that, with respect to any such
dividends and distributions, the Custodian as holder of record may elect to
receive such dividend or distribution in either additional shares, cash or other
property, the Custodian shall elect to receive such
<PAGE>
distribution in additional shares. Sales charges attributable to the acquisition
of securities shall be charged to the Account for which such securities are
acquired. No part of the funds in the Account shall be invested in life
insurance contracts.
(c) The Custodian or its agent shall deliver, or cause to be executed and
delivered, to the Depositor all notices, prospectuses, financial statements,
proxies, voting instruction cards, and proxy soliciting material relating to
securities held in the Account. The Custodian in its capacity as Custodian
hereunder or its agent shall vote all shares of the Designated Investment
Company held hereunder in accordance with the written instructions of the
Depositor.
5. The Depositor shall have the right, prior to completion of distribution of
his or her Account, by written notice to the Custodian or its agent, to
designate, revoke, and to change a designation of a beneficiary or beneficiaries
of any distribution from the Account following the death of the Depositor, and
if no such beneficiary is designated in accordance herewith the Depositor's
beneficiary shall be his or her estate.
6. The Depositor shall not use the Account or any portion thereof as security
for a loan, nor shall the individual or his or her beneficiary engage in any
transaction prohibited by Section 4975 of the Code.
7. (a) Neither the Custodian, its agent nor any affiliates shall be responsible
for any liability arising out of this Agreement except such liability as is
occasioned by the negligence or willful misconduct of the Custodian, its agent
or affiliates. Neither the Custodian, its agent nor any affiliates shall be
responsible for any action or no action taken at the Depositor's request and
each may rely upon and shall be protected in acting upon any written order from
the Depositor or any other notice, request, consent, certificate or other
instrument reasonably believed by the Custodian, its agent or any affiliate to
be genuine and to have been properly executed. Neither the Custodian, its agent
nor any affiliates shall be liable to pay interest on any cash or cash balances
maintained in the Account which has not been invested.
(b) Neither the Custodian, its agent nor any affiliates shall be obligated to
defend or engage in any suit with respect to the Account unless each shall first
have agreed in writing to do so and shall have been fully indemnified to the
satisfaction of the Custodian, its agent and/or any affiliates. The Depositor
shall at all times indemnify and hold harmless the Custodian, its agent and any
affiliates from any liability arising from any action taken by the Custodian,
its agent or any affiliates upon the written instructions of the Depositor.
<PAGE>
(c) The Custodian may resign at any time upon sixty (60) days' notice in writing
to the Depositor and may be removed by the Sponsor (First Investors Corporation)
or the Depositor at any time upon thirty (30) days' written notice to the
Custodian or such shorter notice as may be acceptable to the Custodian, which
successor shall be a bank or such other qualified person under Section 408(a)(2)
of the Code. If within sixty (60) days after the Custodian's resignation or
removal the Depositor or the Sponsor has not appointed a successor custodian
which has accepted such appointment, the custodian shall, unless it elects to
terminate the Account, appoint such successor itself. Upon receipt by the
Custodian of written notice of acceptance of such appointment by a successor
custodian, the Custodian or its agent shall transfer and pay over to such
successor the assets of the Account and all records pertaining thereto. In
connection with such transfer, however, the Custodian or its agent is authorized
to reserve such sum of money as is necessary for the payment of its fees.
(d) The Custodian shall terminate the Account if within sixty (60) days after
the removal or resignation of the Custodian no qualified successor custodian has
notified the Custodian of its acceptance to act. Termination of the Account
shall be effected by distributing the assets of the Account by a single sum
payment in cash or in kind as the Depositor may elect. Upon completion of such
distribution, the Custodian, its agent and any affiliates shall be relieved from
all further liability with respect to all amounts so distributed.
8. (a) The Depositor agrees that the fees of the Custodian as set forth in the
Application shall be paid when due. Such fees may be waived by the Custodian at
any time and may be revised by the Custodian upon forty-five (45) days' written
notice to the Depositor. Custodial fees which have been revised in accordance
with this Section will become legally binding upon the Depositor unless he or
she objects by sending written notice of such objection to the Custodian within
forty-five (45) days of the date of the Custodian's or its agent's notice to the
depositor of such revision.
9. The Custodian appoints Administrative Data Management Corp., the transfer
agent for each of the Designated Investment Companies hereunder, as its agent
for receiving and processing contributions, transferring assets of the Account,
processing shareholder correspondence (e.g., revocations and designation of
beneficiaries), sending required notices and other documents relating to the
Account and voting shares in the Account hereunder.
10. The Federal Deposit Insurance Corporation (FDIC) does not insure amounts
invested in an Individual Retirement Account merely because the trustee or
custodian, such as the Custodian, is an
<PAGE>
institution the accounts of which are covered by such insurance. Only
investments in the accounts of such institutions themselves are insured by the
FDIC subject to its rules and regulations.
11. This Agreement may be amended by the Sponsor (First Investors Corporation)
by submitting a copy of any such amendment to the Depositor and to the Custodian
at least thirty (30) days in advance of the effective date of any such
amendment; provided, however, that no such advance submission shall be required
in the case of any amendment that may be required by the Internal Revenue
Service, from time to time, so that the Account shall remain an Individual
Retirement Account under Section 408 of the Code. For purposes of Article VII, a
Depositor shall be deemed to have consented to any amendment not required by the
Internal Revenue Service if he or she does not terminate the Account before the
effective date of such amendment.
12. This Agreement shall be construed, administered and enforced according to
the laws of New Jersey.
GENERAL INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF THE FORM
Form 5305-A is a model custodial account agreement that meets the requirements
of section 408(a) of the Code 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 compliance
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
receive from your custodian, see Pub. 590, Individual Retirement Arrangements
(IRAs).
<PAGE>
DEFINITIONS
Custodian - The Custodian must be a bank or savings and loan association, as
defined in Section 408(n) of the Code, or any person who has the approval of the
IRS to act as custodian.
Depositor - The Depositor is the person who establishes the IRA 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 required only for an IRA
for which a return is filed to report unrelated business taxable income. 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 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) of the Code have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that re agreed to by the Depositor and the 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 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.
<PAGE>
IMPORTANT INFORMATION
This IRA Master Account Application applies to all accounts registered
identically in funds sponsored by First Investors Corporation and its
affiliates.
Section 4. I understand that through accumulated investments I can reduce my
sales charges on purchases of Class A shares. In the next 13 month period, I
plan to invest in shares of one or more First Investors eligible funds the
aggregate amount checked in this application. I understand that I may combine
Class A and Class B shares of any eligible (including Class B shares of the
money market funds) funds to qualify for this reduced sales charge. I hereby
irrevocably appoint First Investors Corporation ("FIC") my agent and my attorney
with full power to redeem any shares held in escrow, if necessary. I understand
that if the amount indicated is not invested within 13 months, the reduced sales
charge does not apply.
Section 8. I wish to establish an automatic payroll investment program and
authorize my employer to initiate credit entries of amounts deducted from my pay
to an account at First Financial Saving Bank, S.L.A. ("FFS"). I further
authorize FFS to accept any such funds and to transfer them to First Investors
for investment in the First investors account(s) designated in the application
or as changed by my written instructions to FIC. FFS shall have no
responsibility for the correctness thereof or for determining the existence of
any further authorization relating hereto. I agree that neither FFS, FIC nor any
affiliates will be liable for any loss, liability, cost or expense from acting
upon such instructions. I understand that in order to terminate this
authorization I must give written notice to my employer.
Section 9. I authorize FIC to initiate debit entries to my bank account listed
in this application. Investments will be made the same day my bank account is
debited or, if a weekend or holiday, on the following business day. If such
debit is dishonored by the bank upon presentation, FIC may discontinue this
service and cancel the shares purchased and charge me for any loss.
Section 10. I authorize Administrative Data Management Corp. ("ADM"), as
transfer agent, to accept and act upon telephone instructions from myself, or my
FIC Registered Representative (if I have so authorized), to effect exchanges of
shares among eligible funds owned by me.
If I authorize my FIC Registered Representative to effect telephone exchanges
upon my instruction, I understand that this authorization applies to my
representative only as long as the Registered Representative is assigned to my
account(s), according to the books
<PAGE>
and records of FIC. If my Registered Representative is replaced with a new FIC
Registered Representative by FIC, the telephone exchange privileges assigned to
my former representative will automatically be transferred to the new FIC
Registered Representative. Telephone exchange privileges may be modified or
terminated at any time at the sole discretion of FIC, ADM, or the fund(s). This
authorization may be terminated by submitting written notice to ADM. Please
allow 5 days processing time after receipt.
In acting upon telephone instructions, First Investors and the Funds use
procedures which are reasonably designed to ensure that such instructions are
genuine, such as (1) obtaining some or all of the following information: account
number, name and social security number, mother's maiden name, last elementary
school attended; (2) recording all telephone instructions; and (3) sending
written confirmation of each transaction to my address of record. I understand
that this policy places the entire risk of loss for unauthorized or fraudulent
transactions on me, except that if First Investors Corporation, the Funds, or
their affiliates do not follow reasonable procedures, some or all of them may be
liable for any such losses.
Prior to making an exchange, I have received and read the prospectus of the fund
into which the exchange is being made. Only one telephone exchange is permitted
within any 30 day period for each account authorized. Each of the First
Investors funds reserves the right to change or terminate the exchange
privilege. An administrative fee may be charged on exchanges and may be waived
at any time.
Executive Investors Funds
If I have purchased Executive Investors Funds, I have received the required
Disclosure Form.
FIRST INVESTORS GROUP OF
MUTUAL FUNDS
PROFIT SHARING/
MONEY PURCHASE PENSION
RETIREMENT PLAN
ARTICLE I. INTRODUCTION
The Employer hereby establishes this Plan and related Custodial Account to
provide retirement, death and disability benefits for participants and their
beneficiaries. This Plan is a standardized paired prototype defined contribution
plan and is designed to permit adoption of profit sharing provisions, money
purchase pension provisions, or both. The provisions herein and the selections
made by the Employer by execution of the money purchase pension or profit
sharing Application/Adoption Agreement or Agreements, shall constitute the Plan.
It is intended that the Plan and related Custodial Account qualify under
Sections 401 and 501 of the Internal Revenue Code, as amended, as well as under
the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
ARTICLE II. DEFINITIONS
As used in this Plan, the related Custody Agreement and the Application/Adoption
Agreement, the following terms shall have the meanings hereinafter set forth,
unless a different meaning is plainly required by the context:
2.1 "Application/Adoption Agreement" means the written agreement for the
establishment of this Plan and Custody Agreement in connection therewith. The
information contained therein shall be part of this Plan as is set forth fully
herein.
2.2 "Beneficiary" means the person or persons designated by a Participant in
writing to receive benefits upon his or her death. If the designated Beneficiary
predeceases the Participant, or if no valid designation is in effect at the
Participant's death, the Beneficiary shall be deemed to be the Participant's
surviving spouse, of if none, the legal representative of the Participant's
estate.
2.3 "Break in Service" or "One Year Break in Service" means a Plan Year during
all or a part of which the Participant is not employed by Employer and does not
complete more than five hundred (500) Hours of Service with Employer.
2.4 "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
2.5 "Compensation" means compensation, as that term is defined in
<PAGE>
Section 13.5(b), received by a Participant from the Employer for the period
during which he is a Participant, for the taxable year of the Employer ending
with or within the Plan Year. In the case of a Self-Employed Individual,
compensation means the individual's Earned Income from the Employer.
Compensation shall exclude amounts in excess of $200,000 (or such other amount
as may be established by the Secretary of the Treasury pursuant to Section
415(d) of the Code), except that the dollar increase in effect on January 1st of
any calendar year is effective for years beginning in such calendar year and the
first adjustment to the $200,000 limitation is effective on January 1, 1990. If
the Plan determines Compensation on a period of time that contains fewer than
twelve (12) calendar months, then the annual Compensation limit is an amount
equal to the annual Compensation limit for the calendar year in which the
Compensation period begins multiplied by the ratio obtained by dividing the
number of full months in the period by twelve (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 nineteen (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 the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this Section 2.5 prior to the application of
this limitation.
2.6 "Custodial Account" means the account established under the Custodial
Agreement entered into pursuant to Article I and forming a part hereof.
2.7 "Custodian" means the institution identified as such in the
Application/Adoption Agreement or any successor trustee or custodian.
2.8 "Custody Agreement" means the Agreement which is made a part of this Plan
and pursuant to which the Custodial Account is established and maintained.
2.9 "Designated Investment Company" means the investment company or companies,
all of which shall be regulated investment companies within the meaning of
Section 851(a) of the Code and which issue only redeemable stock, underwritten,
distributed or sponsored by First Investors Corporation, and designated or
redesignated by the Employer in the Application/Adoption Agreement and from time
to time by written notice by the Employer to the Custodian with the written
consent of the Custodian.
2.10 "Earned Income" means the net earnings from self-employment in any 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
<PAGE>
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 taxpayer by Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.11 "Effective Date" means the date on which the Plan became effective, as
specified in the Application/Adoption Agreement.
2.12 "Employee" means any person employed by the Employer or any entity required
to be aggregated under Section 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 foregoing sentence as provided in Sections 414(n)
or (o) of the Code.
2.13 "Employer" means:
(a) The corporation, self-employed individual or organization named in the
Application/Adopted Agreement (also referred to herein as the "Applicant");
(b) Any successor corporation or organization to all or a major portion of the
property or business of the Applicant, which elects to continue this Plan with
written approval of the Custodian; and
(c) Such subsidiaries or other affiliated corporations and organizations of the
Employer, or of its successor, which adopts this Plan, and which is approved in
writing by the Custodian.
2.14 "Entry Date" means the date selected in the Application/Adoption Agreement
on which an Employee becomes a Participant in the Plan.
2.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder by the Department of Labor
or the Department of Treasury.
2.16 "First Investors Plans" means contractual plans sponsored by First Investor
Corporation for the accumulation of shares of First Investors Government Fund,
Inc., First Investors High Yield Fund, Inc., First Investors Fund for Income,
Inc., and First Investors Global Fund, Inc., and any other contractual plans
which First Investors Corporation may sponsor at any time.
2.17 "Highly Compensated Employee" means a highly compensated active employee or
a highly compensated former employee, as described below.
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: (i) received compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Section
<PAGE>
415(d) of the Code); (ii) 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 (iii) was an officer of the Employer and
received compensation during such year that is greater than 50 percent of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term
Highly Compensated Employee also includes: (i) 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 (ii) employees who are 5 percent owners at any time during the look-back
year or determination year.
If no officer has satisfied the compensation requirement of (ii) above during
either a determination year or a 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
shall be the twelve (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 fifty-fifth (55th)
birthday.
If an employee is, during a determination year or look-back year, a family
member of either a five (5) percent owner who is an active or former employee or
a Highly Compensated Employee who is one of the ten (10) most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the five percent (5%) owner or top-ten (10)
Highly Compensated Employees shall be aggregated. In such case, the family
member and five percent (5%) owner or top-ten Highly Compensated Employees 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 five percent (5%) owner or ten (10) Highly Compensated
Employees. 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 one hundred (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.
<PAGE>
2.18 "Hour 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 shall 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 service or leave of absence. No more than five hundred and one
(501) Hours of Service shall 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 are
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 shall not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours shall 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.
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)), or a group of trades or businesses under
common control (under Section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to Section 414(o) and the regulations thereunder. Hours of Service will
also be credited for any individual considered an employee for purposes of this
Plan under Section 414(n) or Section 414(o) and the regulations thereunder.
Solely for determining whether a Break in Service has occurred in a computation
period, for participation and vesting purposes, 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, eight (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 absence (i) by
reason of the pregnancy of the individual, (ii) by reason of a birth of a child
of the individual, (iii) by reason of the placement of a child with the
individual in connection with the adoption of such child by such individual, or
(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of
<PAGE>
Service credited under this paragraph shall be credited (i) in the computation
period in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or (ii) in all other cases, in the following
computation period.
(d) "Hours of Service" shall be determined on the basis of the method selected
by the Employer in the Application/Adoption Agreement.
2.19 "Insurer" means First Investors Life Insurance Company, a legal reserve
life insurance company.
2.20 "Key Employee" means 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 fifty percent
(50%) of the dollar limitation under Section 415(b)(1)(A) of the Code, an owner
(or one who is considered an owner under Section 318 of the Code) of one of the
ten (10) largest interests in the Employer if such individual's compensation
exceeds one hundred percent (100%) of the dollar limitation under Section
415(c)(1)(A) of the Code, a five percent (5%) owner of the Employer, or a one
percent (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(a)(8), Section 402(h) or Section 430(b) of the
Code. The determination period for the first Plan Year is the first Plan Year.
The determination period for each subsequent Plan Year is the five (5) 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.
2.21 "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 service for the recipient (or for
any 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: (i)
such employee is covered by a money purchase pension plan providing (a) a
nonintegrated employer contribution rate of at least 10 percent 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 420(a)(8), Section 402(h) or
Section 403(b) of the Code, (b) immediate
<PAGE>
participation, and (3) full and immediate vesting; and (ii) Leased Employees do
not constitute more than twenty percent (20%) of the recipient's non-Highly
Compensated Employee workforce.
2.22 "Military Service" shall mean a leave of absence granted by the Employer
for service in the armed forces of the United States of America which shall be
counted in determining Hours of Service under the Plan, provided such Employee
returns to employment with the Employer within ninety (90) days of his or her
release from active Military Service or any longer period during which his or
her right to reemployment is protected by law.
2.23 "Named Fiduciary" means the Plan Administrator and any other person who is
specifically so designated by the Employer.
2.24 "Net Profits" means current and accumulated earnings of the Employer before
federal and state taxes and contributions to this Plan and any other qualified
plan, as determined in accordance with generally accepted accounting principles.
2.25 "Normal Retirement Age" means the attainment of age sixty-five (65) or such
other date as specified in the Application/Adoption Agreement. If the Employee
enforces a mandatory age, the Normal Retirement Age is the lesser of that
mandatory age or the age specified in the Application/Adoption Agreement. If,
for Plan Years beginning before January 1, 1988, the Normal Retirement Age was
determined with reference to the anniversary of the participation commencement
date (more than five (5) but not to exceed ten (10) years), the anniversary date
for Participants who first commenced participation under the Plan before the
first Plan Year beginning on or after January 1, 1988 shall be the earliest of
(a) the tenth anniversary of the date the Participant commenced participation in
the Plan (or such anniversary as had been elected by the Employer, if less than
ten (10)), or (b) the fifth anniversary of the first day of the first Plan Year
beginning after January 1, 1988. The participation commencement date is the
first day of the first Plan Year in which the Participant commenced
participation in the Plan.
2.26 "Owner-Employee" means an individual who is a sole proprietor, or who is a
partner owning more than ten percent (10%) of either the capital or profits
interests of a partnership.
2.27 "Participant" means a person who has met the eligibility requirements set
forth in the Application/Adoption Agreement and whose account hereunder has been
neither completely forfeited nor completely distributed.
2.28 "Plan" means the paired prototype defined contribution profit sharing and
money purchase pension plan provided under this basic plan document. References
to the Plan shall refer to the profit sharing provisions, the money purchase
pension provisions, or both, as the context may require.
<PAGE>
2.29 "Plan Administrator" means the Employer or such other party or parties
designated by the Employer, who shall also be the Named Fiduciary for the
administration of the Plan.
2.30 "Plan Year" means the 12 consecutive month fiscal year of the Employer
unless another period is indicated in the Application/Adoption Agreement.
2.31 "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,
or an individual who would have had Earned Income for the taxable year but for
the fact that the trade or business had no net profits for the taxable year.
2.32 "Shareholder-Employee" means an employee or officer of an electing small
business corporation (within the meaning of Section 1361(a)(1) of the Code) who
owns (or is considered to own within the meaning of Section 318(a)(1) of the
Code), on any day during the taxable year of such corporation, more than five
percent (5%) of the outstanding stock of such corporation.
2.33 "Sponsor" means the sponsoring organization, First Investors Corporation.
2.34 "Total and Permanent Disability" means the inability of a Participant to
engage in any substantial gainful activity because of any medically determinable
physical or mental impairment which can be expected to result in death or to be
of long, continued and indefinite duration. The permanence or degree of such
impairment shall be supported by medical evidence.
2.35 "Year of Service" for vesting purposes means a Plan Year during which an
Employee completed for the Employer the minimum number of Hours of Service (not
more than one thousand (1,000)) indicated in the Adoption Agreement. For the
purposes of determining eligibility to participate, a Year of Service shall mean
such minimum number of Hours of Service (not more than one thousand (1,000))
indicated in the Adoption Agreement beginning with the twelve (12)-month period
commencing with the first Hour of Service performed by the Employee and each
Plan Year beginning after such Hour of Service. If an Employee earns a Year of
Service credit during the first twelve (12)-month period commencing with his or
her first Hour of Service and if such Employee earns an additional Year of
Service credit during the Plan Year commencing during such twelve (12)-month
period, then he or she shall be credited with two (2) Years of Service for
purposes of eligibility to participate.
ARTICLE III. ADMINISTRATION
3.1 Named Fiduciary and Plan Administrator
(A) The Plan Administrator is charged with the complete control and management
of the operation, administration and interpretation
<PAGE>
of the Plan. The Plan Administrator shall be appointed by the Employer in the
Money Purchase Pension or Profit Sharing Application/Adoption Agreement or
Agreements, but if no Plan Administrator is appointed, the Employer shall be the
Plan Administrator. The Plan Administrator may employ such agents as is deemed
desirable or necessary to assist in the performance of the duties hereunder. To
the extent such persons are performing duties as a fiduciary under ERISA, such
employment shall constitute a delegation of fiduciary responsibility under
Section 405(c) of ERISA.
(b) The Administrator or any other fiduciary may serve in more than one
fiduciary capacity with respect to the Plan.
3.2 The Plan Administrator may adopt such rules as it deems necessary,
desirable, or appropriate for the administration of the Plan. All rules and
decisions of the Plan Administrator shall be applied uniformly and consistently
to all Participants in similar circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled to rely upon information
furnished by a Participant or Beneficiary, the Employer, the legal counsel of
the Employer, or the Custodian.
3.3 The Employer shall take all action and prepare and file all documents and
reports necessary or appropriate under ERISA and any other applicable Federal
law.
3.4 Any Participant or Beneficiary under the Plan may file a written claim for
Plan benefits with the Plan Administrator or with a person named by the Plan
Administrator to receive claims under the Plan.
3.5 In the event of a denial of any benefit or payment due to or requested by
any Participant or Beneficiary under the Plan ("claimant"), claimant shall be
given a written notification containing specific reasons for the denial. The
written notification shall contain specific references to the pertinent Plan
provisions on which the denial of his or her benefit is based. In addition, it
shall contain a description of any other material or information necessary for
the claimant to perfect a claim, and an explanation of why such material or
information is necessary. The notification shall further provide appropriate
information as to the steps to be taken if the claimant wishes to submit his or
her claim for review. This written notification shall be given to a claimant
within ninety (90) days after receipt of his or her claim by the Plan
Administrator unless special circumstances require an extension of time for
processing the claim.
In the event of a denial of a claim for benefits, the claimant or his or her
duly authorized representative shall be permitted to review pertinent documents
and to submit to the Plan Administrator issues and comments in witting. In
addition, the claimant or his or her duly authorized representative may make a
written request for a full and fair review of his or her claim and its denial by
<PAGE>
the Plan Administrator; provided, however, that such written request must be
received by the Plan Administrator (or its delegate to receive such requests)
within sixty (60) days after receipt by the claimant of written notification of
the denial of the claim. The sixty (60) day requirement may be waived by the
Plan Administrator in appropriate cases.
3.6 A decision on review of a claim for benefits shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of time
for processing the decision, it may be postponed on written notice to the
claimant (prior to the expiration of the initial sixty (60) day period) for an
additional sixty (60) days, but in no event shall the decision be rendered more
than one hundred twenty (120) days after the receipt of such request for review.
Any decision by the Plan Administrator shall be furnished to the claimant in
writing and shall set forth the specific reasons for the decision and the
specific Plan provisions on which the decision is based.
ARTICLE IV. ELIGIBILITY
4.1 Each Employee of the Employer shall become a Participant in the Plan as of
the first Entry Date following the date the Employee satisfies the minimum age
and service requirements selected by the Employer in the Application/Adoption
Agreement. If no age and service requirements are selected by the Employer, an
Employee will become a Participant on the date he or she first performs an Hour
of Service for the Employer. An Employee will become a Participant no later than
the earlier of (a) the first day of the Plan Year beginning after the date on
which the Employee has met the minimum age and service requirements or (b) six
(6) months after the date the requirements are met.
4.2 All Years of Service with the Employer are counted towards eligibility
except that in the case of a former Participant who does not have any
nonforfeitable right to the account balance derived from Employer contributions,
Years of Service before a period of consecutive One Year Breaks in Service will
not be taken into account in computing eligibility service if the number of
consecutive One Year Breaks in Service equals or exceeds the greater of five (5)
or the aggregate number of Years of Service before such Breaks in Service. Such
aggregate number of Years of Service will not include any Years of Service
disregarded under the preceding sentence by reason of a prior Break in Service.
If such former Participant's Years of Service before termination from service
may not be disregarded pursuant to the preceding sentence, such former
Participant shall participate immediately upon returning to the employ of the
Employer.
4.3 A former Participant will become a Participant immediately upon returning to
the employ of the Employer if such former Participant had a nonforfeitable right
to all or a portion of the account balance derived from Employer contributions
at the time of termination from service.
<PAGE>
4.4 Employees covered by a collective bargaining agreement between the Employer
and Employee representatives under which retirement benefits were the subject of
good faith bargaining are not eligible to participate in this Plan, provided
that no more than two percent of the Employees of the Employer who are covered
pursuant to that agreement are professionals as defined in Section 1.410(b)-9(q)
of the proposed regulations. For this purpose, "employee representative" does
not include any organization more than one-half of whose members are Employees
who are owners, officers, or executives of the Employer. In the event a
Participant is no longer a member of an eligible class of Employees and becomes
ineligible to participate but has not incurred a Break in Service, such Employee
will participate immediately upon returning to an eligible class of Employees.
If such Participant incurs a Break in Service, eligibility will be determined
under the Break in Service rules of the Plan. In the event an Employee who is
not a member of an eligible class of Employees becomes a member of an eligible
class, such Employee will participate immediately if such Employee has satisfied
the minimum age and service requirements and would have otherwise previously
become a Participant.
4.5 If life insurance policies are to be purchased in respect of an Employee, he
or she shall become a Participant as of the date on which he or she shall become
eligible to participate, if within thirty (30) days of the date he or she is
advised of his or her eligibility for participation, he or she assents to a
written application by the Employer for a policy on his or her life.
4.6 The Employer shall notify each Employee, in writing, of his or her
eligibility to participate in the Plan not less than thirty (30) days prior to
any Entry Date on which the Employee becomes eligible for participation, and
similar notice shall be given to the Insurer.
4.7 An Employee who fails to perform the act prescribed by Section 4.5 within
the required time shall forfeit his right to become a Participant until the next
succeeding Entry Date.
4.8 By assenting to a written application for a Policy, each Employee who
becomes a Participant shall be deemed for all purposes to have conclusively
assented to the provisions of this Plan as embodied herein, including any
amendment hereto, and also to have assented to all of the terms of any and all
policies issued by the Insurer on his or her life; and each Employer, and the
estate of an Employee or his or her Beneficiary, shall be bound thereby as if
each had formally executed the Application/Adoption Agreement and had
individually purchased the policy or policies.
<PAGE>
ARTICLE V. CONTRIBUTIONS
5.1 By the Employer.
(a) Profit Sharing Contributions. For each Plan Year, the Employer shall
contribute to the Custodial Account an amount as may be determined by the
Employer in accordance with the profit sharing formula set forth in the
Application/Adoption Agreement.
(b) Money Purchase Pension Contributions. For each Plan Year, the Employer shall
contribute to the Custodial Account an amount equal to such uniform percentage
of Compensation of each eligible Participant as determined by the Employer in
accordance with the money purchase pension contribution formula selected in the
Application/Adoption Agreement.
(c) Eligible Participants. Subject to the minimum allocation rules in Section
6.2, Participants who are employed on the last day of the Plan Year or, for Plan
Years beginning on or after January 1, 1990, complete more than 500 Hours of
Service during the Plan Year shall be eligible to share in the Employer
contributions. An Employer may elect in the Application/Adoption Agreement to
allocate a contribution on behalf of a Participant who terminates employment
before the end of a Plan Year beginning before January 1, 1990, or on behalf of
a Participant who terminates employment with 500 or fewer Hours of Service in a
Plan year beginning on or after January 1, 1990.
(d) Contribution Limitation. In no event shall any Employer contributions exceed
the maximum amount deductible from the Employer's income under Section 404 of
the Code, or the maximum limitations under Section 415 of the Code provided in
Article XIII.
(e) Payment. All Employer Contributions to the Custodial Account for the
Profit-Sharing Plan for any Plan Year shall be made in money either in one lump
sum or in installments within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the Employer's federal
income tax return for the taxable year with or within which such Plan Year ends.
All Employer Contributions to the Custodial Account for the Money Purchase
Pension Plan for any Plan Year shall be made in money either in one lump sum or
in installments within the time prescribed by regulations under Section
412(c)(10) of the Code.
5.2 By Participants.
(a) If selected by the Employer in the Application/Adoption Agreement, each
Participant may contribute on behalf of himself or herself an additional
non-deductible amount of money. Any such contribution by a Participant shall be
voluntary on his or her part and shall not be a condition to the allocation of
any part of the contribution of the Employer to the Participant, nor shall the
Employer or the Custodian be responsible for determining the amount of the
contribution by the Employee. Such contributions may be made by payroll
deductions or such other means as the Employer may determine, to the extent
permitted by applicable law.
<PAGE>
(b) All contributions by a Participant shall be credited solely to his or her
account and held for the purposes of the Plan as hereinafter provided. Such
Employee contributions shall be used only for the purpose of providing benefits
to the individual contributor in addition to the benefits provided by the
Employer's contributions. Such amounts shall not be segregated for investment
purposes but shall be valued in the same manner as the other portions of the
Participant's account.
(c) The Employer shall furnish to each Employee who makes contributions to the
Plan on his or her own behalf a current prospectus of the Designated Investment
Company or Companies in which such contribution is to be invested.
(d) Notwithstanding the foregoing provisions of this Section 5.2, this Plan will
not accept nondeductible Employee contributions for Plan Years beginning after
the Plan Year in which this Plan is adopted by the Employer. Employee
contributions for Plan Years beginning after December 31, 1986, will be limited
so as to meet the nondiscrimination test of Section 401(m).
5.3 Transfer of Assets or Rollovers from Other Plans.
(a) Subject to the approval of the Plan Administrator, the Custodian shall
accept a direct transfer of assets from the trustee or custodian of any other
qualified plan described in Section 401(a) of the Code or from a qualified
annuity plan described in Section 403(a) of the Code to be held for the benefit
of any Participant to the full extent permitted by the Code.
(b) Subject to the approval of the Plan Administrator, the Custodian shall
accept rollover amounts within the meaning of Section 402(a)(5) of the Code.
(c) Any transfer of assets or rollover to the Custodial Account shall be
credited to the Participant's transfer account or rollover account, as the case
may be, established under Section 6.1 and separately accounted for. Such assets
shall be liquidated promptly and the proceeds shall be invested in Designated
Investment Company shares. The Plan Administrator shall ensure that the transfer
account preserves all optional forms of benefits of the transferor plan
protected by Section 411(d)(6) of the Code and the regulations thereunder.
5.4 Administration of Contributions.
Contributions made under Section 5.2 shall be remitted by contributing
Participants to the Custodian through the Employer and not by the Participants
directly. The Employer may commingle contributions made under Sections 5.1 and
5.2, but shall instruct the Custodian to credit the amount of each Section 5.1
and each Section 5.2 contribution to separate accounts for each Participant. The
Employer shall keep records of the amounts of each Section 5.1 and each Section
5.2 contribution, respectively, to be credited to each participant's account and
the dates he or she remits them to the Custodian.
<PAGE>
ARTICLE VI. ALLOCATION OF CONTRIBUTIONS
6.1 Individual Accounts.
The Plan Administrator shall establish and maintain a separate account or
accounts in the name of each Participant. The following accounts, where
applicable, shall be established in the name of the Participant:
(a) A profit-sharing contribution account shall credit each such Participant's
share of Employer contributions, forfeitures (if allocated among Participants)
and earnings on such amount, which shall be allocated in the manner selected in
the Application/Adoption Agreement.
(b) A money purchase pension contribution account shall credit each such
Participant's share of Employer contributions, forfeitures (if allocated among
Participants) and earnings on such amounts, which shall be allocated in the
manner selected in the Application/Adoption Agreement.
(c) A voluntary contribution account shall credit voluntary contributions, if
any, made by the Participant under Section 5.2.
(d) A transfer of assets account shall credit contributions to the Custodial
Account accepted under Section 5.3.
(e) A rollover account shall credit rollover contributions to the Custodial
Account accepted under Section 5.3.
6.2 Minimum Allocation.
(a) If the Employer does not maintain any qualified defined benefit plan in
addition to this Plan, except as provided in (b) and (c) 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 three percent (3%) of such
Participant's compensation (as defined in Section 13.5(b)) or the largest
percentage of Employer contributions and forfeitures, as a percentage of the
first $200,000 of the Key Employee's compensation (as defined in Section
13.5(b)) allocated on behalf of any Key Employee for that year. The minimum
allocation is determined without regard to any Social Security contributions.
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 the
Participant's failure to complete 1,000 Hours of Service.
(b) In the event the Employer maintains any qualified defined benefit plan in
addition to this Plan, the Employer will provide a minimum allocation at least
equal to five percent (5%)
<PAGE>
of compensation (as defined in Section 13.5(b)) to each Participant who is not a
Key Employee and who is entitled under (a) above to receive a minimum
allocation.
(c) The provisions in (a) and (b) above shall not apply to any Participant who
completed 500 or fewer Hours of Service during the Plan Year and was not
employed by the Employer on the last day of the Plan Year.
(d) If the Employer enters into both the profit sharing Application/Adoption
Agreement and the money purchase pension Application/Adoption Agreement under
this Plan, to avoid a duplication of the minimum allocation under this Section
6.2, contributions that are sufficient to satisfy the minimum allocation
requirements of this Section 6.2 shall be made exclusively to the money purchase
pension plan. However, for plan years beginning after December 31, 1991, if the
profit sharing plan and money purchase pension plan do not benefit the same
participants, the minimum allocation required by this Section 6.2 shall be made
under both the profit sharing plan and money purchase pension plan.
(e) The minimum allocation required under this Section 6.2 (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
6.3 Allocation of Employer Contributions.
(a) All profit-sharing contributions will be allocated to the account of each
Participant in the ratio that such Participant's Compensation bears to the
Compensation of all Participant's.
(b) All money purchase pension contributions for a given Plan Year shall be
allocated to the account of the Participant for whom such contribution was made.
6.4 (a) Any forfeiture from a participant's profit sharing contribution account
arising under the Plan for a given Plan Year shall be allocated among
Participants in the same manner as contributions are allocated, as selected by
the Employer in the Application/Adoption Agreement.
(b) Any forfeiture from a Participant's money purchase pension contribution
account arising under the Plan for a given Plan Year shall either be applied to
reduce the Employer contribution for that Plan Year under Section 6.1(a), or in
succeeding Plan Years if necessary, or, for Plan Years beginning after December
31, 1995, allocated among participants in the ratio that each Participant's
Compensation bears to the Compensation of all Participants, as selected by the
Employer in the Application/Adoption Agreement.
<PAGE>
6.5 Withdrawals and Distributions.
Any distribution to a Participant or his or her Beneficiary or any withdrawal by
a Participant shall be charged to the appropriate account(s) of the Participant
as of the date of the distribution or the withdrawal.
ARTICLE VII. VESTING
7.1 All contributions made by the Employer to the Participant's money purchase
pension contribution account and profit-sharing contribution account shall be
fully vested and nonforfeitable upon the Participant's death while in the employ
of the Employer, Total and Permanent Disability, or the attainment of Normal
Retirement Age.
7.2 All voluntary contributions made by the Participant and all investments made
with such contributions, and the earnings thereon, shall immediately become and
at all times remain fully vested and nonforfeitable.
7.3 A Participant's interest in contributions made on his or her behalf by the
Employer shall be vested to the extent and in the manner set forth on the
Application/Adoption Agreement.
7.4 In the case of any Participant who has incurred a One Year Break in Service,
Years of Service before such Break will not be taken into account for purposes
of determining the Participant's vested interest until the Participant has
completed a Year of Service after such Break in Service.
7.5 In the case of a Participant who has five (5) or more consecutive One Year
Breaks in Service, the Participant's pre-Break service will count for vesting
purposes only if either:
(a) such Participant has any nonforfeitable interest in his or her account
balance attributable to Employer contributions at the time of separation from
service, or
(b) upon returning to service the number of consecutive One Year Breaks in
Service is less than the number of Years of Service.
7.6 In the case of a Participant who has five (5) or more consecutive One Year
Breaks in Service, all service after such Breaks in Service will be disregarded
for the purpose of vesting in the Employer-derived account balance that accrued
before such Breaks in Service. Separate accounts will be maintained by the
Employer for the Participant's pre-Break and post-Break Employer-derived account
balance. Both accounts will share in the earning and losses of the Custodial
Account.
7.7 (a) If a Participant terminates service with the Employer, and the value of
the Participant's vested account balance derived from Employer and employee
contributions is not greater than $3,500, the Participant will receive, as soon
as practicable following his or her termination of service, a lump sum
distribution of the value of the entire vested portion of such
<PAGE>
account balance. Upon such distribution, the nonvested portion will be treated
as a forfeiture. For purposes of this Section 7.7(a), if the value of a
Participant's vested account balance is zero, the employee shall be deemed to
have received a distribution of such vested account balance. A Participant's
vested 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.
(b) If a Participant terminates service with the Employer, and the value of the
Participant's vested account balance derived from Employer and employee
contributions is greater than $3,500, the Participant will receive, as soon as
practicable following his or her termination of service, a lump sum distribution
of the value of the entire vested portion of such account balance, provided the
Participant elects, in accordance with the requirements of Section 9.8, to
receive the distribution. Upon such distribution, the nonvested portion will be
treated as a forfeiture.
(c) If a Participant receives a distribution pursuant to this Section 7.7 which
is less than the value of the Participant's account balance derived from
Employer contributions, and resumes employment covered under this Plan, the
Participant's account will be restored by the Employer to the amount on the date
of the distribution if the Participant repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of five
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive One-Year Breaks in Service following the date of distribution. If a
Participant is deemed to receive a distribution pursuant to Section 7.7(a), and
the Participant resumes employment covered under this Plan before the date the
Participant incurs five (5) consecutive One-Year Breaks in Service, upon the
reemployment of such Participant, the Employer-derived account balance of the
Participant will be restored to the amount on the date of such deemed
distribution.
7.8 No amendment to the vesting schedule shall deprive a Participant of his or
her nonforfeitable rights to benefits accrued to the date of the amendment.
Further, if the vesting schedule of the Plan is amended, or if the Plan is
amended in any way that directly or indirectly affects the computation of a
Participant's nonforfeitable percentage, each Participant with at least three
(3) Years of Service with the Employer may elect, within a reasonable period
after the adoption of the amendment, to have his or her nonforfeitable
percentage computed under the Plan without regard to such amendment. For
Participants who do not have at least one (1) Hour of Service in any Plan Year
beginning after December 31, 1988, the preceding sentence shall be applied by
substituting "five (5) Years of Service" for "three (3) Years of Service" where
such language appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the later of:
<PAGE>
(i) Sixty (60) days after the amendment is adopted;
(ii) Sixty (60) days after the amendment becomes effective; or
(iii) Sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
7.9 All of Employee's Years of Service with the Employer shall be counted to
determine the nonforfeitable percentage of his or her account balance derived
from Employer contributions, except as provided in Sections 7.4, 7.5 and 7.6
above.
7.10 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 account balance may be reduced to the extent
permitted under Section 412(c)(8) of the Code. For purposes of this paragraph, a
Plan amendment which has the effect of decreasing a Participant's account
balance 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 the 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 nonforfeitable
percentage (determined as of such date) of such Employee's right to his or her
Employer-derived accrued benefit will not be less than his or her percentage
computed under the Plan without regard to such amendment.
ARTICLE VIII. PAYMENT OF BENEFITS
8.1 When a Participant ceases to be in the service of the Employer, whether by
reason of death or otherwise, the Employer shall have his or her vested interest
determined.
8.2 In the event that a Participant's service is terminated prior to Normal
Retirement Age for reasons other than those of death or Total and Permanent
Disability, any distribution to the Participant shall be made in accordance with
Section 7.7 and in a manner provided by Section 8.4. If the value of the
Participant's vested account balance derived from Employer and employee
contributions exceeds $3,500 and such Participant does not elect to receive a
distribution upon termination of service, the Participant's vested benefits will
be paid to him or her upon attainment of Normal Retirement Age in accordance
with Section 8.4, or to his or her Beneficiary upon his death, whichever comes
first.
8.3 Any Participant who has made contributions on behalf of himself or herself
may, upon thirty (30) days written notice filed with the Employer, withdraw all
or any portion of the lesser of the amounts specified in clauses (a) and (b)
below:
(a) The aggregate amount of such contributions (but not including any earnings
thereon), or
<PAGE>
(b) The fair market value of the Investment Company shares purchased with the
aggregate amount of such contributions. No forfeitures will occur solely as a
result of a Participant's withdrawal of Employee contributions.
8.4 Except as otherwise provided in Article IX, Joint and Survivor Annuity
Requirements, if the Participant's employment terminates on or after Normal
Retirement Age, the Participant's benefits shall be distributed in accordance
with one of the methods selected by the Employer in the Application/Adoption
Agreement. The Participant shall select the method of distribution.
8.5 If a Participant becomes Totally and Permanently Disabled, the amount
credited to his account may be distributed to him or her commencing at any time
within six (6) months after the date of such disability in accordance with
Section 8.4.
8.6 Unless the Participant elects otherwise, distribution of benefits will begin
no later than the sixtieth (60th) day after the latest of the close of the Plan
Year in which:
(a) the Participant attains age sixty-five (65) (or Normal Retirement Age, if
earlier);
(b) occurs the tenth(10th) anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) the Participant terminates service with the Employer.
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 9.8 of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this Section.
8.7 If the Participant dies before all of his or her vested account balance has
been distributed, the remaining portion shall be paid to his or her Beneficiary.
The Beneficiary may elect to receive the remaining portion in either a single
sum or in installments over a period certain.
If this Plan is a profit sharing plan, a married Participant may not designate
as his or her primary Beneficiary any one other than his or her spouse, without
the written consent of his or her spouse. The spouse's consent must satisfy the
following requirements:
(a) The spouse's consent must be in writing;
(b) The spouse's consent must be witnessed by a Plan representative or a notary
public;
(c) The spouse's consent must approve a designation of a specific Beneficiary,
including any class of Beneficiaries or any contingent
<PAGE>
Beneficiaries, which may not be changed without spousal consent (or the spouse
expressly permits designations by the Participant without any further spousal
consent); and
(d) The spouse's consent acknowledges the effect of the Participant's
designation of Beneficiary.
Any consent by a spouse obtained under this provision (or establishment that the
consent of the 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 that the
spouse voluntarily elects to relinquish such right. If it is established to the
satisfaction of a Plan representative that the Participant does not have a
spouse or the spouse cannot be located, spousal consent shall not be required.
8.8 In the event that any benefits under this Plan are to be paid by means of
the distribution of a paid-up annuity contract, such contract must be
nontransferable, and the terms of such contract shall comply with the
requirements of this Plan.
ARTICLE IX. JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 The provisions of this Article IX shall apply to any Participant who is
credited with at least one (1) Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 9.7.
9.2 Qualified Joint and Survivor Annuity. Unless an optional form of benefit is
selected pursuant to a qualified election within the ninety (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.
9.3 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.
The surviving spouse may elect subsequent to the Participant's death to waive
the qualified preretirement survivor annuity and choose to receive benefits in
any other form permitted by the Plan.
<PAGE>
9.4 Definitions
(a) Election period:
The period which begins on the first day of the Plan Year in which the
Participant attains age thirty-five (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 thirty-five (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.
A Participant who will not yet attain age thirty-five (35) as of the end of any
current Plan Year may make a 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 thirty-five (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 9.5(a). Qualified preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan Year in which the
Participant attains age thirty-five (35). Any new waiver on or after such date
shall be subject to the full requirements of this Article.
(b) Earliest retirement age:
The earliest date on which, under the Plan, the Participant could elect to
receive retirement benefits.
(c) 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 designation 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)
<PAGE>
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 9.5
below.
(d) 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 fifty percent (50%) and not more
than one hundred percent (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 fifty percent
(50%).
(e) 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.
(f) Annuity starting date:
The first day of the first period for which an amount is paid as an annuity or
any other form.
(g) Vested account balance:
The aggregate value of the Participant's vested account balances derived from
Employer and 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 Article shall apply to a Participant
who is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
9.5 Notice Requirements
(a) In the case of a qualified joint and survivor annuity, the Plan
Administrator shall, no less than thirty (30) days and no more than ninety (90)
days prior to the annuity starting date, provide each Participant a written
explanation of: (i) the terms and conditions of a qualified joint and survivor
annuity; (ii) the
<PAGE>
Participant's right to make and the effect of an election to waive the qualified
joint and survivor annuity form of benefit; (iii) the rights of a Participant's
spouse; and (iv) the right to make, and the effect of, a revocation of a
previous election to waive the qualified joint and survivor annuity.
(b) In the case of a qualified preretirement survivor annuity as described in
Section 9.3 of this Article, 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 9.5(a) applicable to a qualified joint and survivor
annuity.
The applicable period for a Participant is whichever of the following periods
ends last: (i) the period beginning with the first day of the Plan Year in which
the Participant attains age thirty-two (32) and ending with the close of the
Plan Year preceding the Plan Year in which the Participant attains age
thirty-five (35); (ii) a reasonable period ending after the individual becomes a
Participant; (iii) a reasonable period ending after Section 9.5(c) ceases to
apply to the Participant; or (iv) a reasonable period ending after this Article
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
thirty-five (35).
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii), (iii) and (iv) is the end of the
two (2)-year period beginning one (1) year prior to the date the applicable
event occurs, and ending one (1) year after that date. In the case of a
Participant who separates from service before the Plan Year in which age
thirty-five (35) is attained, notice shall be provided within the two (2)-year
period beginning one (1) year prior to separation and ending (1) year after
separation. If such a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
(c) Notwithstanding the other requirements of this Section 9.5, the respective
notices prescribed by this Section need not be given to a Participant if (1) the
Plan "fully subsidizes" the costs of a qualified joint and survivor annuity or
qualified preretirement survivor annuity, and (2) 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 9.5(c), 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.
<PAGE>
9.6 Safe harbor rules.
(a) This Section shall apply to a Participant in a profit-sharing plan, and 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: (1) the Participant does not or cannot elect payments
in the form of a life annuity; and (2) on the death of the 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 ninety (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 9.6 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 9.6 is operative, then the provisions of this Article,
other than Section 9.7, shall be inoperative.
(b) The Participant may waive the spousal death benefit described in this
Section at any time provided that no such waiver shall be effective unless it
satisfies the conditions of Section 9.4(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver of
the qualified preretirement survivor annuity.
(c) For purposes of this Section 9.6, 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 9.4(g).
9.7 Transitional Rules.
(a) Any living Participant not receiving benefits on August 23, 1984, who would
otherwise not receive the benefits prescribed by the previous Sections of this
Article must be given the opportunity to elect to have the prior Sections of
this Article apply if such Participant is credited with at least one (1) 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 ten (10) years of
vesting service when he or she separated from service.
<PAGE>
(b) Any living Participant not receiving benefits on August 23, 1984, who was
credited with at least one (1) 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 9.7(d)
of this Article.
(c) The respective opportunities to elect (as described in Section 9.7(a) and
9.7(b) 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.
(d) Any Participant who has elected pursuant to Section 9.7(b) of this Article
and any Participant who does not elect under Section 9.7(a) or who meets the
requirements of Section 9.7(a) except that such Participant does not have at
least ten (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:
(i) 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 six (6) months before the Participant attains
qualified early retirement age and not more than ninety (90) days before the
commencement of benefits. Any election hereunder will be in writing and may be
changed by the Participant at any time.
(ii) 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
<PAGE>
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 ninetieth (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.
(iii) For purposes of this Section 9.7(d):
(1) Qualified early retirement age is the latest of:
(i) the earliest date, under the Plan, on which the Participant may elect to
receive retirement benefits,
(ii) the first day of the one hundred and twentieth (120th) month beginning
before the Participant reaches Normal Retirement Age, or
(iii) 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 9.4(d) of this Article.
9.8 Restrictions on Immediate Distributions.
(a) If the value of a Participant's vested account balance derived from Employer
and Employee contributions exceeds (or at the time of any prior distribution
exceeded) $3,500, and the account balance is immediately distributable, the
Participant and the Participant's spouse (or where either the Participant or the
spouse has died, the survivor) must consent to any distribution of such account
balance. The consent of the Participant and the Participant's spouse shall be
obtained in writing within the ninety (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 account balance 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 thirty (30) days and no more than ninety (90)
days prior to the annuity starting date.
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 account balance is immediately distributable. (Furthermore, if
payment in the form of a qualified joint and survivor annuity is not required
with respect to the Participant pursuant to Section 9.6 of the Plan, only the
Participant need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the
<PAGE>
Participant nor the Participant's spouse shall be required to the extent that a
distributions 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) and if the Employer or
other entity within the same controlled group as the Employer does not maintain
another defined contribution plan (other than an employee stock ownership plan
as defined in Section 4975(e)(7) of the Code), the Participant's account balance
will, without the Participant's consent, be distributed to the Participant.
However, if any entity within the same controlled group as the Employer
maintains another defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code) then the
Participant's account balance will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent to an immediate
distribution.
An account balance is immediately distributable if any part of the account
balance 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 sixty-two (62).
(b) 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 Participant's vested account balance
shall not include amounts attributable to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of the Code.
ARTICLE X. DISTRIBUTION REQUIREMENTS
10.1 General Rules.
(a) Subject to Article IX, Joint and Survivor Annuity Requirements, the
requirements of this Article 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 Article apply to calendar
years beginning after December 31, 1984.
(b) All distributions required under this Article shall be determined and made
in accordance with the proposed regulations under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
10.2 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.
<PAGE>
10.3 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):
(a) the life of the Participant,
(b) the life of the Participant and a designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
Participant, or
(d) a period certain not extending beyond the joint and last survivor expectancy
of the Participant and a designated Beneficiary.
10.4 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:
(a) Individual account.
(i) 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.
(ii) 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 fifty percent (50%) of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant.
(iii) 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 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 regulations. Distributions after the death of the Participant shall
be distributed using the applicable life expectancy in Section 10.4(a)(i) above
as the relevant divisor without regard to proposed regulations Section
1.401(a)(9)-2.
(iv) The minimum distribution required for the Participant's first distribution
calendar year must be made on or before the
<PAGE>
Participant's required beginning date. The minimum distribution for other
calendar years, including the minimum distribution for the distribution calendar
year in which the Participant's required beginning date occurs, must be made on
or before December 31 of that distribution calendar year.
(b) 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 proposed regulations thereunder.
10.5 Death Distribution Provisions.
(a) Distributions 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.
(b) 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 (5th) anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with (i)
or (ii) below:
(i) 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;
(ii) if the designated Beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (i) 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 died and (2) December 31 of
the calendar year in which the Participant would have attained age seventy and
one-half (70 1/2).
If the Participant has not made an election pursuant to this Section 10.5(b) 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, or (2) December 31 of the calendar year which contains the fifth (5th)
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 (5th)
anniversary of the Participant's death.
<PAGE>
(c) For purposes of Section 10.5(b) above, if the surviving spouse dies after
the Participant, but before payments to such spouse begin, the provisions of
Section 10.5(b), with the exception of paragraph (ii) therein, shall be applied
as if the surviving spouse were the Participant.
(d) For Purposes of this Section 10.5, 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.
(e) For the purposes of this Section 10.5, distribution of a Participant's
interest is considered to begin on the Participant's required beginning date
(or, if Section 10.5(c) above is applicable, the date distribution is required
to begin to the surviving spouse pursuant to Section 10.5(b) 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.
10.6 Definitions.
(a) 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 (1) 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.
(b) Designated Beneficiary.
The individual who is designated as the Beneficiary under the Plan in accordance
with Section 401(a)(9) and the proposed regulations thereunder.
(c) 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 10.5 above.
<PAGE>
(d) 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 10.5(b)(ii) 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 for a nonspouse Beneficiary may not
be recalculated.
(e) Participant's benefit.
(i) The account balance as of the last valuation date in the calendar year
immediately preceding the distribution calendar year (valuation 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.
(ii) Exception for second distribution calendar year. For purposes of paragraph
(i) 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.
(f) Required beginning date.
(i) General rule. The required beginning date of a Participant is the first day
of April of the April of the calendar year following the calendar year in which
the Participant attains age seventy and one-half (70 1/2).
(ii) Transitional rules. The required beginning date of a Participant who
attains age seventy and one-half (70 1/2) before January 1, 1988, shall be
determined in accordance with (1) or (2) below:
(1) Non-five (5)-percent owners. The required beginning date of a Participant
who is not a five (5)-percent 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 seventy and one-half (70 1/2) occurs.
(2) Five (5)-percent owners. The required beginning date of a Participant who is
a five(5)-percent 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 seventy and one-half
(70 1/2), or
<PAGE>
(B) the earlier of the calendar year with or within which ends the Plan Year in
which the Participant becomes a five (5)-percent owner, or the calendar year in
which the Participant retires.
The required beginning date of a Participant who is not a five (5)-percent owner
who attains age seventy and one-half (70 1/2) during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
(iii) Five (5)-percent owner. A Participant is treated as a five (5)-percent
owner for purposes of this section if such Participant is a five (5)-percent
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.
(iv) Once distributions have begun to a five (5)-percent owner under this
section, they must continue to be distributed, even if the Participant ceases to
be a five (5)-percent owner in a subsequent year.
10.7 Transitional Rule.
(a) Notwithstanding the other requirements of this Article and subject to the
requirements of Article IX, Joint and Survivor Annuity Requirements,
distribution on behalf of any Participant, including a five (5)-percent owner,
may be made in accordance with all of the following requirements (regardless of
when such distribution commences):
(i) The distribution by the trust (or custodial account) is one which would not
have disqualified such trust (or custodial account) under Section 401(a)(9) of
the Code as in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution designated
by the Participant whose interest in the trust (or custodial account) if being
distributed or, if the Participant is deceased, by a Beneficiary of such
Participant.
(iii) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(iv) The Participant had accrued a benefit under the Plan as of December 31,
1983.
(v) The method of distribution designated by the Participant 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
Participant's death, the
<PAGE>
Beneficiaries of the Participant listed in order of priority.
(b) 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 Participant.
(c) For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, 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 subsections (a)(i) and (v).
(d) If a designation is revoked, any subsequent distribution must satisfy the
requirements of Section 401(a)(9) of the Code and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions are
required to begin, the trust (or custodial account) 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 proposed
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 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 of Section 1.401(a)(9)-1 of the proposed regulations shall apply.
ARTICLE XI. CUSTODIAL ACCOUNT
11.1 All contributions under the Plan shall be paid over to a Custodial Account
to be maintained by the Employer with the Custodian. The Custody Agreement
pursuant to which such Account is maintained shall provide:
(a) That the investment of all funds in such Account (including all earnings)
shall be made solely in one or more First Investors Plans, or stock of one or
more Designated Investment Companies included in the First Investors Group of
Mutual Funds, each of which issues only redeemable stock, the shares of which
are currently offered for sale to the public; or stock of any other Designated
Investment Company, or any combination of the foregoing,
<PAGE>
as specified by the Employer at the time each contribution is made; or, to the
extent permitted by Section 11.4 hereof, insurance policies;
(b) That the shareholder of record of all such stock shall be the Custodian or
its nominee; and
(c) That the assets of the Account will be valued annually at fair market value
as of the last day of the Plan Year.
11.2 The Participants shall be the beneficial owners of all such stock held in
the Custodial Account.
11.3 Based upon information supplied to the Custodian by the Plan Administrator
separate accounts shall be kept for employer contributions for Participants,
voluntary contributions by Participants, transfer of asset contributions and
rollover contributions by Participants. Investment of funds in the Custodial
Account shall be earmarked on behalf of Participants. The Employer shall
purchase investments ratably on behalf of all Participants.
11.4 A portion of the contribution made by the Employer in any Plan Year for any
Participant may, if determined by the Employer, be used to pay premiums on
ordinary or term life insurance policies insuring the life of the Participant;
provided that the amount of the aggregate premium are less than one-half (1/2),
in the case of ordinary life insurance, or one-quarter (1/4), in the case of
term or universal life insurance, of the aggregate of Employer contributions
allocated to the Participant at any particular time. Notwithstanding the
foregoing, the sum of one-half (1/2) of the ordinary life insurance premiums and
all other life insurance premiums shall not exceed one-quarter (1/4) of the
aggregate Employer contributions allocated to any Participant. For purposes of
these incidental insurance provisions, ordinary life insurance contracts are
contracts with both nondecreasing death benefits and nonincreasing premiums.
No such policy may include any provision for an automatic premium loan. The
following restriction shall be made a part of any such policy:
"This policy is not transferable and may not be sold, assigned, discounted or
pledged as collateral for a loan or as security or for any other purpose to any
person other than the issuer of the policy."
Dividends, if any, on such a policy shall be used to reduce the premium payment
on such policy.
11.5 The Custodian shall apply for and will be the owner of any insurance
contract purchased under the terms of this Plan. The insurance contract(s) must
provide that the proceeds will be payable to the Custodian; however, the
Custodian shall be required
<PAGE>
to pay over all proceeds 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 9.4(c) of this Plan. Under no circumstances shall the Custodial
Account 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.
11.6 Subject to Article IX, Joint and Survivor Annuity Requirements, in the
event a Participant is entitled to a distribution of benefits, the entire value
of all life insurance contracts issued on his or her behalf shall be converted
to cash and used to provide benefits or distributed to the Participant upon
commencement of benefits.
ARTICLE XII. AMENDMENT AND TERMINATION
12.1 Each Employer who adopts this Plan delegates to the Sponsor the power to
amend the Plan. The Sponsor shall submit a copy of the amendment to each
Employer and, if applicable, to the Internal Revenue Service. Each Employer
shall be deemed to have consented to any such amendment.
12.2 The Sponsor shall not have the power to amend the Plan in such manner as
would cause or permit any part of the assets in the Custodial Account to be
diverted to purposes other than for the exclusive benefit of Participants or
their portion of such assets to revert to or become the property of the
Employer.
12.3 The Sponsor shall not have the right to modify or amend the Plan
retroactively in such manner as to deprive any Participant, or his or her
Beneficiary, of any benefit to which he or she was entitled under the Plan by
reason of contributions made by the Employer prior to the modification or
amendment, unless such modification or amendment is necessary to conform the
Plan to, or satisfy the conditions of, any law, governmental regulation or
ruling, and to permit the Plan and the Custodial Account to meet the
requirements of Sections 401 and 501(a) of the Code or any similar statute
enacted in lieu thereof.
12.4 If the Employer amends the Plan other than to adopt (i) elective provisions
in the Application/Adoption Agreement, (ii) amendments stated in the
Application/Adoption Agreement which allow the Plan to satisfy Section 415 of
the Code and/or to avoid duplication of minimums under Section 416 of the Code
because of the required aggregation of multiple plans, or (iii) 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, such Employer shall no longer participate in this prototype plan, but
will be considered to have an individually designed plan. An Employer that
amends the Plan to obtain a waiver of the minimum funding requirement under
Section 412(d) of the Code will be considered to have an individually designed
plan.
<PAGE>
12.5 The Plan shall terminate:
(a) If the Employer is dissolved or adjudicated bankrupt or insolvent in
appropriate proceedings, or if a general assignment is made by the Employer for
the benefit of creditors; or
(b) If the Employer should lose its identity by merger, consolidation or
reorganization into one or more corporations or organizations, unless within
sixty (60) days after such merger, consolidation or reorganization such
corporations or organizations elect by an instrument in writing delivered to the
Custodian to continue the Plan and such continuation is approved by the
Custodian.
12.6 In the event of termination, partial termination or complete discontinuance
of contributions hereunder, the account balance of each Participant shall be
fully vested and nonforfeitable. Upon the termination of the Plan, any and all
assets remaining in the Custodial Account, together with any earnings produced
by such assets following such termination, shall be distributed by the Custodian
to the Participants in accordance with amounts credited to their accounts. Such
distribution shall be in cash or kind in one or more of the ways provided by
Section 8.4, as directed by the Employer. Upon the completion of such
distribution, the Custodian shall be relieved from all further liability with
respect to all amounts so paid.
12.7 In the event of any merger or consolidation with, or transfer of assets or
liabilities to any other plan, each Participant shall be entitled to a benefit
after the merger, consolidation or transfer (if the Plan had then terminated)
which is 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).
ARTICLE XIII. LIMITATIONS ON ALLOCATIONS
The provisions of this Article are applicable to limitation years beginning
after December 31, 1986.
13.1 Employers Who Do Not Maintain Other Qualified Plans.
(a) If the Participant does not participate in, and has never participated in
another qualified plan 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, maintained by the employer, which
provides an annual addition as defined in Section 13.5(a), the amount of annual
additions which may be credited to the Participant's account for any limitation
year will not exceed the lesser of the maximum permissible amount or any other
limitation contained in this Plan.
<PAGE>
If the employer contributions that would otherwise be contributed or allocated
to the Participant's 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.
(b) 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.
(c) 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.
(d) If, pursuant to Section 13.1(c) or as a result of the allocation of
forfeitures, there is an excess amount, the excess will be disposed of as
follows:
(i) Any nondeductible voluntary contributions, to the extent they would reduce
the excess amount, will be returned to the Participant;
(ii) If, after the application of paragraph (i), 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 account will be used to reduce employer
contributions (including any allocation of forfeitures) for such Participant in
the next limitation year, and each succeeding limitation year if necessary;
(iii) If, after the application of paragraph (i), an excess amount still exists,
and the Participant is not covered by the Plan at the end of the 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;
(iv) If a suspense account is in existence at any time during a limitation year
pursuant to this Section, it will participate in the allocation of 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 Participant's accounts before any employer or
employee contributions may be made to the Plan for the limitation year. Excess
amounts may not be distributed to Participants or former Participants.
13.2 Employers Who Maintain Other Qualified Master or Prototype Defined
Contribution Plans.
<PAGE>
(a) This Section applies if, in addition to this Plan, the Participant is
covered under another qualified master or prototype defined contribution plan 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)(a)
of the Code, maintained by the employer, which provides an annual addition, as
defined in Section 13.5(a), during any limitation year. The annual additions
which may be credited to a Participant's 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 account under the other plans and
welfare benefit funds for the same limitation year. If the annual additions with
respect to the Participant under other defined contribution plans and welfare
benefit funds maintained by the employer are less than the maximum permissible
amount and the employer contributions that would otherwise be contributed or
allocated to the Participant's 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
defined contribution plans and welfare benefit funds in the aggregate are equal
to or greater than the maximum permissible amount, no amount will be contributed
or allocated to the Participant's account under this Plan for the limitation
year.
(b) 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 13.1(b).
(c) 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.
(d) If, pursuant to Section 13.2(c), above, 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 welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
(e) 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,
(i) the total excess amount allocated as of such date, times
<PAGE>
(ii) the ratio of (1) the annual additions allocated to the Participant for the
limitation year as of such date under this Plan to (2) the total annual
additions allocated to the Participant for the limitation year as of such date
under this and all the other qualified master or prototype defined contribution
plans.
(f) Any excess amount attributed to this Plan will be disposed in the manner
described in Section 13.1(d).
13.3 Employers Who, In Addition To This Plan, Maintain Other Qualified Plans
Which Are Defined Contribution Plans Other Than Master Or Prototype Plans.
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 account under this Plan for
any limitation year will be limited in accordance with Section 13.2 as though
the other plan were a master or prototype plan unless the employer provides
other limitations in the Application/Adoption Agreement.
13.4 Employers Who, In Addition To This Plan, Maintain A Qualified Defined
Benefit Plan.
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 one (1) in any limitation year. The annual additions which may be
credited to the Participant's account under this Plan for any limitation year
will be limited in accordance with the Application/Adoption Agreement.
13.5 Definitions.
For purposes of this Article XIII only, the following definitions and rules of
interpretation shall apply:
(a) "annual additions" - The sum of the following amounts credited to a
Participant's account for the limitation year:
(i) employer contributions;
(ii) forfeitures;
(iii) employee contributions;
(iv) amounts allocated after March 31, 1984, to an individual medical account,
as defined in Section 415(1)(1) 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;
(v) 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
<PAGE>
419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the employer are treated as annual additions
to a defined contribution plan; and
(vi) excess amounts applied, under Sections 13.1(d) or 13.2(f) in the limitation
year to reduce employer contributions will be considered annual additions for
such limitation year.
(b) "compensation" - A Participant's earned income, 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 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, reimbursements and expense allowances), and excluding the following:
(i) 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 to
the extent such contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
(ii) 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;
(iii) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(iv) 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 described in Section 403(b) of the Code (whether or not
the amounts are actually excludable from the gross income of the employee).
For purposes of applying the limitations of this Article XIII, compensation for
a limitation year beginning after December 31, 1991, is the compensation
actually paid or includible in gross income during such year.
Notwithstanding the preceding sentence, compensation for a Participant 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, and contributions made on behalf of such
Participant are nonforfeitable when made.
<PAGE>
(c) "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 one hundred percent (100%) of the dollar
limitation in effect for the limitation year under Sections 415(b)(1)(A) and
415(d) of the Code or one hundred and forty percent (140%) of 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 one hundred
percent (100%) 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.
(d) "defined contribution dollar limitation" - thirty thousand dollars ($30,000)
or, if greater, one-fourth (1/4th) of the defined benefit dollar limitation set
forth in Section 415(b)(1) of the Code as in effect for the limitation year.
(e) "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 voluntary contributions to all
defined benefit plans, whether terminated, maintained by the employer and the
annual additions attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, and individual medical accounts, as defined in
Section 415(l)(2) of the Code, 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 one hundred percent (100%) of the
dollar limitation in effect under Section 415(c)(1)(A) of the Code or
thirty-five percent (35%) of the Participant's compensation for such year.
If the Participant 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
<PAGE>
this fraction will be adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed one (1) 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 one (1) 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 of the plans made after May 5, 1986, but
making 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
employee contributions as annual additions.
(f) "employer" - 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) of the Code), all commonly controlled trades or
businesses (as defined in Section 414(c) of the Code as modified by Section
415(h) of the Code), or affiliated service groups (as defined in Section 414(m)
of the Code) 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.
(g) "excess amount" - The excess of the Participant's annual addition for the
limitation year over the maximum permissible amount.
(h) "highest average compensation" - The average compensation for the three (3)
consecutive years of service with the employer that produces the highest
average. A year of service with the employer is the Plan Year.
(i) "limitation year" - A Plan Year, or the twelve (12)-consecutive month period
elected by the employer in a resolution. All qualified plans maintained by the
employer must use the same limitation year. If the limitation year is amended to
a different twelve (12)-consecutive month period, the new limitation year must
begin on a date within the limitation year in which the amendment is made.
(j) "master or prototype plan" - A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(k) "maximum permissible amount" - The lesser of the defined contribution dollar
limitation or twenty-five percent (25%) of the Participant's compensation for
the limitation year. The compensation limitation referred to in the previous
sentence shall not apply to any contribution for medical benefits (within the
meaning of Section 401(h) or Section 419(f)(2) of the Code) which is otherwise
treated as an annual addition under Sections 415(i)(2) or 419A(d)(2) of the
Code. If a short limitation year is created
<PAGE>
because of an amendment changing the limitation year to a different twelve
(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
- ---------------------------------------------
twelve (12)
(l) "projected annual benefit" - The annual retirement benefit (adjusted to an
actuarial 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:
(i) the Participant will continue employment until normal retirement
age under the plan (or current age, if later), and
(ii) 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.
ARTICLE XIV. MISCELLANEOUS
14.1 Status of Participants.
The Employer hopes and expects to continue the Plan and the payment of
contributions hereunder indefinitely, but such continuance is not assigned as a
contractual obligation except as required by ERISA. Neither the establishment of
the Plan and the Custody Agreement nor any modification thereof, nor the
creation of any fund or account, nor the payment of any benefits, shall be
construed as giving to any Participant or other person any legal or equitable
right against the Employer, or the Custodian, except as provided herein or in
said Custody Agreement or as required by ERISA, nor as modifying or affecting in
any way whatsoever the terms of employment of any Participant.
14.2 Administration of the Plan.
The Plan Administrator shall have all the responsibility for administration set
forth in this Plan and all the responsibility set forth for Plan Administrators
in ERISA.
14.3 Allocation of Charges.
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the assets of the Plan, or the income arising
therefrom, any transfer taxes incurred in connection with the investment and
reinvestment of such assets, all other administrative expenses incurred by the
Custodian in the performance of its duties, including fees for legal services
rendered to the Custodian and the Custodian's compensation, shall be paid and
charged as provided in the Custody Agreement.
<PAGE>
14.4 Condition of Plan and Custody Agreement.
It is a condition of this Plan and Custody Agreement and each Employee by
participating herein expressly agrees that he or she shall look solely to the
assets of the Custodial Account for the payment of any benefit to which he or
she is entitled under the Plan. As provided in ERISA, no prohibited transaction
with a disqualified person or party in interest shall be permitted, except to
the extent allowed therein.
14.5 Inalienability of Benefits.
The benefits provided hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution or levy, and any attempt to cause such
benefits to be so subjected shall not be recognized except to such extent as may
be required by law. 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, or any domestic relations order entered before January 1,
1985.
14.6 Necessity of Qualification.
The Plan and Custody Agreement are established with the intent that they shall
qualify under Section 401 and Section 510(a) of the Internal Revenue Code, as
amended. If the Employer's plan fails to attain or retain qualification, such
plan will no longer participate in this prototype Plan and will be considered an
individually designed plan. If the Employer's plan fails to attain or retain
qualification, the funds of such plan will be removed from the Custodial Account
as soon as adimistratively feasible.
14.7 Predecessor Employers.
If the Employer maintains the plan of a predecessor employer, service with such
predecessor employer will be treated as service for the Employer to the extent
required by Section 414(a) of the Code.
14.8 Aggregation Rules.
(a) 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 this and all other
trades or businesses.
(b) 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
<PAGE>
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.
(c) If an individual is covered as an Owner-Employee under the plans of two (2)
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 trades or businesses which are 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.
(d) For purposes of paragraphs (a), (b) and (c), an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two (2) or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or business, or
(ii) in the case of a partnership, own more than fifty percent (50%) of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two (2) or more
Owner-Employees shall be treated as owning an interest in a partnership which is
owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two (2) or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
14.9 Exclusive Benefit.
The corpus or income of the Custodial Account may not be diverted to or used for
other than the exclusive benefit of the Participants or their Beneficiaries,
except under the following conditions:
(a) Any contribution made by the Employer because of a mistake of fact must be
returned to the Employer within one year of contribution.
(b) In the event that the Commissioner of Internal Revenue determines that the
Plan is not initially qualified under the Internal Revenue Code, any
contribution 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.
(c) If the Employer conditions a contribution to the Plan on its deductibility
under Section 404 of the Code, then, to the extent the deduction is disallowed,
the contribution shall be returned to the Employer within one year after the
disallowance of the deduction.
<PAGE>
14.10 Governing Law.
This Plan and the Custody Agreement shall be construed, administered and
enforced according to the laws of the State of New York, except as superseded by
Federal law.
FIRST INVESTORS CORPORATION CUSTODY AGREEMENT
FOR
PROFIT SHARING/MONEY PURCHASE PENSION RETIREMENT PLAN
First Financial Savings Bank, S.L.A.
Dear Sirs:
The Employer, engaged in the business shown in the Application/Adoption
Agreement filed in conjunction herewith (the "Employer"), has established a
Retirement Plan ("Plan") (a copy of which is attached hereto as Exhibit "A") for
the benefit of the participants therein (the "Participants"), intended to
qualify under Section 401 of the Internal Revenue Code of 1986, as amended,
("Code"). As part of the Plan, the Employer hereby requests First Financial
Savings Bank, S.L.A. (the "Custodian") to establish a Custodial Account for the
investment of contributions under the Plan in one or more of the following, to
wit, shares of First Investors Series Fund, First Investors High Yield Fund,
Inc., First Investors Fund for Income, Inc., First Investors Global Fund, Inc.,
First Investors Cash Management Fund, Inc., and First Investors Government Fund,
Inc. (all of which are regulated investment companies which issue only
redeemable stock), shares of any other regulated investment company which issues
only redeemable stock and which is underwritten, distributed or sponsored by
First Investors Corporation, First Investors Plans (as described in said Plans,
and hereinafter called "FIC Plans"), and policies of life insurance (sometimes
hereinafter collectively called the "Investments"), upon the terms and
conditions set forth in this Agreement, and this Agreement shall by appropriate
signatures on the said application be deemed to have been subscribed by the
Employer and accepted by the Custodian.
SECTION 1. ESTABLISHMENT OF CUSTODIAL AND PARTICIPANTS' ACCOUNTS
(a) The Custodian shall open and maintain a Custodial Account and, as part
thereof, Participants' accounts for such individuals as the Employer shall from
time to time certify to it as Participants in the Plan. The Participants as of
the effective date of this Agreement are set forth in a schedule attached to the
said Application/Adoption Agreement.
(b) The Employer agrees to submit the Plan promptly to the
<PAGE>
appropriate District Director of Internal Revenue for his approval and to
furnish the Custodian with a copy of its letter of approval promptly after the
receipt thereof or to promptly notify the Custodian if the Plan is disapproved.
If disapproved, then, unless the Plan shall be amended in such manner as shall
be required by the Internal Revenue Service, the Custodian shall terminate this
Agreement and distribute all assets to the Participants or the Employer, as the
Employer directs. This Section 1(b) is not applicable if the Employer has
reliance on the Sponsor's opinion letter for this Plan in accordance with
Section 6 of Internal Revenue Service Revenue Procedure 89-9.
SECTION 2. RECEIPT OF CONTRIBUTIONS
(a) The Custodian shall accept and hold in the Custodial Account such
contributions of money on behalf of the Employer and 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
Participants' accounts to which they are to be credited.
(b) In addition, the Custodian may, in its discretion, accept cash and/or shares
transferred to it from any other FIC Plan which is maintained by the Employer
for the benefit of any of the Participants if the Custodian has received an
opinion of counsel that such other plan satisfies the applicable requirements of
Section 401(a) of the Code. It shall hold the shares, if any, and the cash for
investment in accordance with the provisions of this Section, and shall, in
accordance with the written instructions of the Employer, make appropriate
credits to the accounts of the Participants for whose benefit a contribution has
been made. Any amounts so credited as contributions previously made by the
Employer or by such Participants under such other plan, as specified by the
Employer, shall be treated as contributions previously made under the Plan by
the Employer or by such Participants, as the case may be.
(c) Subject to the approval of the Plan Administrator, the Custodian shall
accept a direct transfer of assets from the trustee or custodian of any other
qualified plan described in Section 401(a) of the Code or from a qualified
annuity plan described in Section 403(a) of the Code, or a rollover contribution
within the meaning of Section 402(a)(5) of the Code, to be held for the benefit
of any Participant to the full extent permitted by the Code. Any such transfer
of assets or rollover on behalf of a Participant shall be separately accounted
for and invested in accordance with Section 3 hereof. In the event that the
transferred or rollover amounts include assets other than cash and/or Designated
Investment Company Shares, the Custodian shall dispose of said other assets and
invest the proceeds in accordance with Section 3 hereof.
<PAGE>
SECTION 3. INVESTMENT OF ACCOUNT ASSETS
The amount of each contribution credited to a Participant's account shall be
promptly applied, after authorized deductions, if any, under the Plan, to the
purchase of investments as directed by the Employer.
All dividends and capital gain distributions received on the shares held in each
Participant's account shall (unless received in additional shares of the
particular mutual fund concerned, after authorized deductions, if any) be
reinvested in such shares, which shall be credited to such account.
If any distribution on any shares in any Participant's account may be received
at the election of the shareholder in additional shares or in cash or other
property, the Custodian shall elect to receive it in additional shares, which
shall be credited to such account.
FIC Plan sales charges shall be charged to the Account of the Participant for
whom shares are acquired.
All Investments acquired by the Custodian shall be registered in the name of the
Custodian or of its registered nominee as defined in the Code and any
regulations of the Treasury Department issued thereunder exempting such
transaction from liability for stock transfer taxes.
Wherever applicable, "shares" shall also mean the shares held through and under
the respective FIC Plans held by the Custodian. The shares held under any FIC
Plans held by the Custodian shall be deemed to be held in each Participant's
account in proportion to his or her interest in the Plan.
SECTION 4. DISTRIBUTIONS FROM THE CUSTODIAL ACCOUNT
On receipt of a written request from the Employer certifying that a
Participant's benefit is payable pursuant to the Plan, the Custodian shall,
after deduction of any applicable charges, including transfer taxes, withdraw
from the applicable FIC Plan or Plans and transfer all shares or Plans credited
to such Participant's account (or such lesser number as the Employer may so
request) into the name of such Participant or his or her designated beneficiary
under the Plan and distribute such shares and Plans (together with all current
earnings and any cash credited to his or her Account) to the transferee.
If any request for payment of a benefit so provides, the Custodian shall pay the
same by withdrawing and selling or redeeming all shares credited to such
Participant's account (or such lesser number as the Employer may so request) and
distribute an annuity contract purchased with the redemption proceeds from an
insurance company designated by the Employer, or distribute the redemption
proceeds (together with all current earnings and any cash credited to his or her
account) in cash to such Participant or his or her designated beneficiary under
the Plan either in a lump sum or in installments, as provided in the Plan
(provided that in the case of
<PAGE>
installment distributions, the Custodian shall redeem only the shares necessary
to make each of the installment payments).
SECTION 5. VOTING AND OTHER ACTION
The Custodian shall not vote any of the shares except in accordance with the
written instructions of the Participant, or if the Investment is a FIC Plan or
Plans, in accordance with the terms and conditions thereof. The Custodian shall
deliver, or cause to be delivered, to the Participants, in care of the Employer,
a sufficient number of notices of any meetings at which the shares may be voted,
related proxy material, together with the voting instruction forms required by
the applicable FIC Plan Certificate so that voting instructions may be given by
the Participants if so desired.
SECTION 6. REPORTS OF THE CUSTODIAN AND EMPLOYER
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions hereunder. Not later than
forty-five (45) days after the close of each calendar year (or after the
Custodian's resignation or removal pursuant to Section 10 hereof), the Custodian
shall file with the Employer a written report or reports reflecting the
receipts, disbursements and other transactions effected by it during such year
(or period ending with such resignation or removal) and the assets and
liabilities of the Custodial Account at its close. The assets of the Custodial
Account shall be valued annually at fair market value on the last day of the
Plan Year. Such report or reports shall be open to inspection by any Participant
for a period of sixty (60) days immediately following the date on which it is
filed with the Employer. Upon the expiration of such sixty (60)-day period, the
Custodian shall be forever released and discharged from all liability and
accountability to anyone with respect to its acts, transactions, duties,
obligations or responsibilities as shown in or reflected by such report, except
with respect to any such acts or transactions as to which the Employer shall
have filed written objections with the Custodian within such sixty (60)-day
period.
The Employer shall furnish to the Custodian, and the Custodian shall furnish to
the Employer, such information relevant to the Plan and Custodial Account as may
be required under the Code and any regulations issued or forms adopted by the
Treasury Department thereunder.
The Custodian shall keep such records, make such identifications, and file with
the Internal Revenue Service such returns and other information concerning the
Custodial Accounts as may be required of it under the Code and any regulations
issued or forms adopted by the Treasury Department thereunder.
<PAGE>
SECTION 7. CUSTODIAN'S FEE AND EXPENSES OF THE ACCOUNT
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the Custodial Account shall be paid from the
assets of the Account and shall, unless allocable to the accounts of specific
Participants, be charged proportionately to their respective accounts. Any
transfer taxes incurred in connection with the investment and reinvestment of
the assets of the Custodial Account, all other administrative expenses incurred
by the Custodian in the performance of its duties including fees for legal
services rendered to the Custodian, and such compensation to the Custodian as
may be agreed upon from time to time between the Custodian and First Investors
Corporation shall be paid by the Employer, but until paid shall constitute a
charge upon the assets of the Custodial Account.
SECTION 8. CONCERNING THE CUSTODIAN
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 at the Employer's request. The Employer shall at all times fully indemnify
and hold harmless the Custodian, its successors and assigns, from any liability
arising from distributions so made or actions so taken, and from any and all
other liability whatsoever which may arise in connection with this Agreement,
except liability arising from the negligence or willful misconduct of the
Custodian. The 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; or 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 may rely upon
and act upon any writing from the person signing the Application or from any
other person authorized by the Employer to give instructions concerning the
Plan. The previous sentence notwithstanding, the Custodian shall be protected in
acting upon any written order 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, and, so long as it acts in good faith, in
taking or omitting to take any other action.
No amendment to the Plan shall place any greater burden on the Custodian without
its written consent.
The Custodian may employ an agent to receive contributions to the Plan and to do
any and all administrative acts relating to the Plan as the Custodian may do
through an agent.
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 Account
by virtue of this Agreement or the Plan.
<PAGE>
SECTION 9. AMENDMENT
First Investors Corporation and its successor or successors reserves the right
to amend this Agreement in any respect on at least thirty (30) days' notice in
writing to the Custodian; provided, however, that the Custodian's consent shall
be required if its duties are increased by such amendment. First Investors
Corporation shall submit a copy of any amendment of this Agreement to the
Employer.
SECTION 10. RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign at any time upon thirty (30) days' notice in writing to
the Employer, and may be removed by the Employer or by First Investors
Corporation at any time upon thirty (30) days' notice in writing to the
Custodian. Upon such resignation or removal, the Employer or First Investors
Corporation shall appoint a successor custodian or trustee. Upon receipt by the
Custodian of written acceptance of such appointment by the successor custodian
or trustee, 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 or such number of
shares as it may deem advisable for payment of all of 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 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 thirty (30) days after the Custodian's resignation or removal the
Employer or First Investors Corporation has not appointed a successor custodian
or trustee 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
such successor whether or not it makes such appointment itself.
SECTION 11. TERMINATION OF ACCOUNT
The Custodian may elect to terminate the Custodial Account if within thirty (30)
days after its resignation or removal pursuant to Section 10, the Employer or
First Investors Corporation has not appointed a successor custodian or trustee
which has accepted such appointment. This Agreement shall terminate: (a) if the
Employer is dissolved or adjudicated as bankrupt or insolvent in appropriate
proceedings or if a general assignment is made by the Employer for the benefit
of creditors; or (b) if the Employer should lose its identity by merger,
consolidation or reorganization into one or more corporations or organizations,
unless within sixty (60) days after such merger, reorganization or
consolidation, such corporations or organizations elect by an instrument in
writing delivered to the Custodian to continue the Plan and this Agreement
<PAGE>
and such continuation is approved by the Custodian. Termination of the Custodial
Account shall be effected by distributing all assets thereof to the Participants
and their designated beneficiaries pursuant to the direction of the Employer (or
in the absence of such direction, as determined by the Custodian), as on the
termination of the Plan.
Except as otherwise provided in the next paragraph, if the Custodian terminates
the Custodial Account as provided herein, all distributions shall be made in
accordance with the provisions of the Plan, or if a successor custodian or
trustee is appointed and has accepted such appointment, the Custodial Account
will be transferred to such successor custodian or trustee in accordance with
said provisions.
If the Custodian receives written notice that the Internal Revenue Service has
determined that the Plan fails to qualify under Section 401 of the Code, as it
existed at the time the Plan was adopted, by reason of some inadequacy in the
original Plan not removed by a retroactive amendment pursuant to Section 401(b)
thereof or for any other reason, the Custodian shall terminate the Custodial
Account by distributing the assets thereof equitably among the Employer and the
Participants in proportion to their contributions.
Upon termination of the Custodial Account in any manner provided for in this
Section and in Section 10, the Custodian shall be relieved from all further
liability with respect to this Agreement, the Custodial Account and all assets
thereof so distributed, and any determinations by the Custodian of the mode of
distributing the assets of the Custodial Account.
SECTION 12. MISCELLANEOUS
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 except as specifically provided
in this Agreement.
Any notice from the Custodian to the Employer provided for in this Agreement
shall be effective if sent by post paid first class mail to the Employer at its
last address of record.
In the event of any conflict between the provisions of the Plan and those of
this Agreement, the former shall prevail.
This Agreement shall be construed in accordance with the laws of the State of
New York, except to the extent superseded by federal law.
The assets of the Custodial Account shall not be subject to alienation,
assignment, trustee process, garnishment, attachment, execution or levy of any
kind except for a qualified domestic relations order within the meaning of
Section 414(p) of the Code, and except by the Custodian for its fees and
expenses of the
<PAGE>
Custodial Account, and no attempt to cause such assets to be so subjected shall
be recognized except to such extent as may be required by law or provided for
herein.
SECTION 13. PROHIBITED TRANSACTIONS
No prohibited transaction with a disqualified person or party in interest as
defined in Section 4975 of the Code or Section 406 or 407 of the Employee
Retirement Income Security Act of 1974 ("ERISA") shall be permitted, except to
the extent allowed by Section 4975 of the Code or Section 408 of ERISA, or by
administrative exemptions granted under any of such Sections.
INTERNAL REVENUE SERVICE
Plan Description: Prototype Standardized Money Purchase Pension Plan
FFN: 50222020001-02 Case: 9011447 EIN: 13-2608328
BPD: 01 Plan: 002 Letter Serial No: D257900a
Department of Treasury
Washington, DC 20224
Person to Contact: Mr. Dua
Telephone Number: (212) 566-4708
Refer Reply to: E:EP:Q:3
Date: 05/01/91
First Investors Corp
120 Wall Street
New York, NY 10005
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 officers, owners, or 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.
<PAGE>
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, 1989-6 I.R.B. 14; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419A(d)(3). In such situations, the employer should request a
determination 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.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor'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,
/s/John Swain
Chief, Employee Plans Qualifications Branch
<PAGE>
INTERNAL REVENUE SERVICE
Plan Description: Prototype Standardized Profit Sharing Plan
FFN: 50222020001-001 Case: 9011446 EIN: 13-2608328
BPD: 01 Plan: 001 Letter Serial No: D257899a
Department of Treasury
Washington, DC 20224
Person to Contact: Mr. Dua
Telephone Number: (212) 566-4708
Refer Reply to: E:EP:Q:3
Date: 05/01/91
First Investors Corp
120 Wall Street
New York, NY 10005
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 officers, owners, or 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, 1989-6 I.R.B. 14; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419A(d)(3). In such situations, the employer should request a
determination 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.
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If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor'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,
/s/John Swain
Chief, Employee Plans Qualifications Branch
DISCLOSURE STATEMENT INDIVIDUAL RETIREMENT ACCOUNT
1. INTRODUCTION
This Disclosure Statement is distributed to you in accordance with Internal
Revenue Service regulations and is intended to provide you with a concise
explanation of the rules applicable to your Individual Retirement Account (IRA).
WE URGE YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY PRIOR TO ESTABLISHING AN
IRA. Due to the unfavorable tax consequences which may result from the improper
establishment of an IRA, you may wish to confer with your attorney or other
qualified tax advisor if you would like specific advice regarding your IRA. In
addition, further information can be obtained from any district office of the
Internal Revenue Service. The Tax Reform Act of 1986 (TRA) enacted many changes
to the rules governing IRAs. This Disclosure Statement contains a general
explanation of the TRA changes, which are generally effective for tax years
beginning after 1986. Because the Internal Revenue Service has not issued final
regulations with respect to some of the TRA changes or with respect to certain
other statutory provisions, First Investors Corporation reserves the right to
amend the IRA governing instruments and this Disclosure Statement to comply with
any such subsequently issued regulations or applicable laws. The following is a
discussion of the statutory requirements and tax rules governing IRAs.
Additional information can be found in I.R.S. Publication 590, "Individual
Retirement Arrangements".
2. REVOCATION PROCEDURE
If your IRA is established on the date you receive this disclosure Statement, or
within seven (7) days thereafter, you may revoke your IRA, for any reason and
without penalty, within seven (7) days after it is established. If your IRA is
established more than seven (7) days after the date you receive this Disclosure
Statement, it may not be revoked. If you should choose to revoke your IRA, the
entire amount of your contribution will be refunded without adjustment for
administrative expenses or any other amount. In order to revoke your IRA, you
must mail or deliver a written notice of revocation to :
First Investors c/o Administrative Data Management Corp.
Attn: ADM Services Department
581 Main Street Woodbridge, New Jersey 07095-1198
<PAGE>
If mailed, the revocation notice shall be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at
1-800-423-4026 if you have any questions with respect to this procedure.
Generally, your initial contribution is invested in fund shares on the date of
receipt; however, in the case of a large contribution, Administrative Data
Management Corp. reserves the right not to invest such contribution in fund
shares until the 7th day after it is received.
3. IRA REQUIREMENTS
An Individual Retirement Account is a trust created or organized in the United
States for the exclusive benefit of an individual or his or her beneficiaries.
The written instrument creating the trust must satisfy the following
requirements:
1. Except in the case of SIMPLE-IRAs, SEPs, and SARSEPs, rollover contribution
and trustee to trustee transfer (explained below), contributions must be in cash
and may not exceed $2,000 on behalf of any individual;
2. The trustee must be a bank or such other person as approved by the Secretary
of the Treasury;
3. No part of the trust funds may be invested in life insurance contracts;
4. The interest of an individual in an IRA must be nonforfeitable;
5. The assets of the trust may not be commingled with other property except in a
common trust fund or common investment fund; and
6. IRAs must be distributed in accordance with certain rules (explained below).
Your First Investors IRA is a custodial account which is treated as a trust for
these purposes under the Federal tax laws.
4. ELIGIBILITY
You are eligible to establish an IRA for any year in which you work and receive
compensation for such work, provided that you have not attained age 70 1/2 in
the year in question. If eligible, both a husband and wife may each have their
own separate IRA. If either spouse is ineligible to establish an IRA, the other
spouse may be permitted to establish a Spousal IRA.
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"Compensation" includes wages, salaries, professional fees, and other amounts
received for personal services actually rendered, including such items as
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses.
Compensation also includes earned income of a self-employed person and any
amount includable in an individual's income as alimony or separate maintenance
payments. Compensation does not include amounts derived from or received as
earnings or profits from property, such as interest, dividends and rent, or any
amount not includable in gross income.
You may have an IRA whether or not you are a participant in any other retirement
plan. However, if you or your spouse are an active participant in another
retirement plan the amount of your annual contribution which is tax deductible
may be reduced. Please refer to Section 5 for assistance in determining the tax
deductible amount of your annual contribution.
5. CONTRIBUTIONS
A. Deductible Contributions
You may make an annual contribution to your IRA up to a maximum of $2,000 (or
effective for taxable years beginning in 1997, $4,000 for a regular and Spousal
IRA) or 100% of your compensation, whichever is less. If neither you nor your
spouse is an "active participant" in an employer maintained retirement plan at
any time during the year, the entire amount of your contribution will be tax
deductible. If either you or your spouse is an active participant in an employer
maintained retirement plan, but you have adjusted gross income (AGI) below a
certain level (explained below), your entire contribution will be tax
deductible. However, if either you or your spouse is an active participant and
your AGI is above the applicable dollar level, the amount of your contribution
which is tax deductible may be reduced or eliminated.
An exception applies in the case of a husband and wife who lived apart at all
times during the year and filed separate tax returns for the year: they are
treated as not married for the year for purposes of the active participation
rules.
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In order to be deductible for a taxable year, annual contributions must be made
not later than the due date (without regard to extensions) of your tax return
for the year for which the deduction is claimed. Annual contributions may be
made in one or more payments, by check or money order payable to First Investors
Corporation. The minimum payment which may be made is the minimum amount
required for investment in the fund shares which you select for investment of
your contributions. The money earned on your investment will be automatically
reinvested, and is not taxable to you until the year in which you actually
receive it.
You are an "active participant" for a year if you are covered by any of the
following retirement plans:
1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");
2. An annuity plan described in Section 403(a) of the Code;
3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);
4. An annuity contract or custodial account described in Section 403(b) of the
Code;
5. A simplified employee pension (SEP) described in Section 408(k) of the Code;
6. A trust described in Section 501(c)(18) of the Code.
7. A SIMPLE-IRA described in Section 408(p) of the Code.
You are covered by a retirement plan for a year if your employer or union has a
retirement plan under which money is added to your account or you are eligible
to earn retirement credits. You are an active participant for a year even if you
are not yet vested in your retirement benefit. Also, if you make required
contributions or voluntary employee contributions to a retirement plan, you are
an active participant. In certain plans, you may be an active participant even
if you were only employed for part of the year. Starting with the 1987 tax year,
your Form W-2 should indicate your active participant status.
You are not considered an active participant if you are covered by a plan only
because of your service as (1) an Armed Forces Reservist, for less than 90 days
of active service; or (2) a volunteer fire fighter covered for fire fighting
service by a government plan, and your accrued benefit under such plan as of the
beginning of the year is not more than an annuity of $1,800 per year payable at
age 65. Of course, if you are covered by any other plan, these exceptions do not
apply.
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If you would like specific advice as to whether you are an active participant in
a retirement plan, you should consult with your attorney or other qualified tax
advisor.
If you or your spouse is an active participant, you must calculate your adjusted
gross income (AGI) for the year (if you and your spouse file a joint tax return,
you must use your combined AGI) to determine whether your IRA contribution will
be deductible.
Your tax return will show you how to calculate your AGI for this purpose. If
your AGI is at or below a certain level, called the "Threshold Level," you are
treated as if you were not an active participant and you can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are single (or married but treated as single under the exception
described above), your AGI Threshold Level is $25,000. If you are married and
file a joint tax return the Threshold Level is $40,000. If you are married but
file a separate tax return, the Threshold Level is $0.
If your AGI is less than $10,000 above your Threshold Level, you will still be
able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level is called your Excess AGI.
The maximum allowable deduction is $2,000 (or $4,000 for a regular and Spousal
IRA). You may calculate your deduction limit by using the following formula:
$10,000 - Excess AGI x Maximum Allowable = Deduction
- -------------------- Deduction Limit
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in 0). For example, if the result is $1,525, you must round it
up to $1,530. If the final result is below $200 but over 0, your deduction limit
is $200. Your deduction limit cannot, in any event, exceed 100% of your
compensation.
The following examples illustrate the above formula.
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Example One: Mr. Smith, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. He has contributed $2,000 to
his IRA for the current year. Mr. Smith wishes to calculate the deductible
portion of his IRA contribution. He must first determine the amount of his
Excess AGI. Excess AGI is equal to AGI minus the Threshold Level. Since Mr.
Smith is a single individual his Threshold Level is $25,000. Thus, his Excess
AGI is $3,000 ($28,000-$25,000). Mr. Smith will determine his deduction limit as
follows:
$10,000 - $3,000 x $2,000 = $1,400
- ----------------
$10,000
Example Two: Mr. and Mrs. Jones are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Mr. Jones is not covered by any other
retirement plan. Mrs. Jones is an active participant in her employer's
retirement plan. Mr. and Mrs. Jones have each contributed $2,000 to their
separate IRAs. The maximum allowable deduction for each spouse is $2,000. Mr.
and Mrs. Jones wish to calculate the deductible portion of their IRA
contributions. Mr. and Mrs. Jones must first determine the amount of their
Excess AGI. Since they are a married couple filing a joint return the Threshold
Level is $40,000. Thus, their Excess AGI is $5,000 ($45,000-$40,000). Mr. and
Mrs. Jones will each determine their individual deduction limit as follows:
$10,000 - $5,000 x $2,000 = $1,000
- ----------------
$10,000
Mr. and Mrs. Jones will therefore be able to claim a total deduction of $2,000
on their joint income tax return.
B. Non-Deductible Contributions
Even if your deduction is less than $2,000 ($4,000 for a regular and Spousal
IRA), you may still contribute to an IRA up to the lesser of 100% of your
compensation or $2,000 ($2,250 for a Spousal IRA). The amount of your
contribution which is not deductible will be treated as a non-deductible
contribution to your IRA. You may also choose to treat a contribution as
non-deductible even if you could have deducted part or all of the contribution.
Interest or other earnings on your IRA contribution, whether from deductible or
non-deductible contributions, will not be taxed until distributed to you from
the IRA.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your individual income tax return, you must then determine how much of your
contribution is deductible. If you determine that all or a portion of your
contribution is non-deductible, you must report such amount to the IRS on Form
8606 as part of your tax return for the year. If you fail to file Form 8606, you
may be subject to a penalty of $50. If you overstate the amount of the
non-deductible contribution, you may be subject to a penalty of $100.
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C. Spousal IRA Contributions
If you and your spouse file a joint income tax return and your spouse either has
no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make IRA contributions on behalf of yourself and your spouse
for tax years beginning in 1997, the aggregate amount of the contributions to
both your IRA and your spouse's IRA may not exceed the lesser of $4,000 or the
amount of your compensation for such year. The contribution does not have to be
split equally between the IRAs belonging to you and your spouse. However, the
total contributions to either of your IRAs may not exceed $2,000.
If you are unable to make contributions to your IRA because you have attained
age 70 1/2, you may nevertheless continue to make contributions to your
non-working spouse's IRA until the year in which your spouse reaches age 70 1/2.
To establish a spousal IRA, submit a separate IRA Application for your spouse.
D. Excess Contributions
If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever is applicable, such amount is an "excess
contribution." A non-deductible 6% excise tax is imposed upon such excess
contribution for the year in which it is made and also for each following year
until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the date for filing your federal income tax
return for the year for which the excess contribution is made. The earnings
attributable to the excess contribution must also be withdrawn and must be
included in your gross income in the year for which the excess contribution was
made. A timely withdrawal of the excess contributions will permit you to avoid
not only the 6% excise tax but also the 10% penalty tax on premature
distributions. A withdrawal of an excess contribution after the tax return
filing date will avoid the 10% penalty tax on premature distributions, provided
that the total contribution for the year did not exceed $2,250 and no deduction
was allowed for the excess contribution.
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As an alternative to withdrawing such excess contribution, you may eliminate
such excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise tax
until the excess contribution is completely eliminated.
E. SEP-IRA and SIMPLE-IRA Contributions
If your IRA is part of a Simplified Employee Pension (SEP-IRA)or a Savings
Incentive Match Plan for Employees of Small Employers (SIMPLE-IRA) established
by your employer (or by you if you are self-employed), the maximum amount which
may be contributed on your behalf may be greater than the general maximum IRA
limitations on contributions, described above.
The maximum amount which may be contributed on your behalf to a SEP-IRA is the
lesser of (i) 15% of your compensation for the year (if you are self-employed,
your "earned income" after taking into account the SEP-IRA contribution and tax
deduction allowed under Internal Revenue Code Section 164(f) or (ii) $30,000. In
addition, your employer may establish a type of SEP-IRA (a "SARSEP") which would
allow you to make elective contributions to your IRA of up to $7,000 per year,
subject to the same 15% and $30,000 limits. (The $7,000 limit is adjusted by the
Internal Revenue Service for years after 1987.)
Amounts contributed to a SEP-IRA or a SIMPLE-IRA within the above limits are
excluded from your income for Federal income tax purposes until such amounts are
distributed to you. Amounts distributed to you from a SEP-IRA are taxed in the
same manner as distributions from other IRAs.
An amount withdrwn from the SIMPLE-IRA is generally includible in gross
income. However, a SIMPLE-IRA balance may be rolled over or transferred on a
tax-free basis to another IRA designed solely to hold funds under a SIMPLE plan.
In addition, an individual may roll over or transfer his or her SIMPLE-IRA
balance to any IRA on a tax-free basis after a two year period has expired since
the individual first participated in the SIMPLE plan.
Any rollover or transfer must comply with the requirements under section 408.
If an individual withdraws an amount from a SIMPLE-IRA during the two year
period beginning when the individual first participated in a SIMPLE plan and the
amount is subject to the additional tax on early distributions under section
72(t), this additional tax is increased from 10% to 25%.
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<PAGE>
If you are a participant in a SEP-IRA or SIMPLE-IRA, your employer is required
to give you a copy of the SEP-IRA/SIMPLE-IRA documents, including certain
explanatory material concerning the Federal income tax rules for SEP-IRAs, and
inform you each year of the amounts (if any) contributed on your behalf.
To establish a SEP-IRA, the employer should complete and submit Form 5305-SEP,
and Schedule A, contained within the First Investors SEP-IRA/SARSEP-IRA
Retirement Plan documents. To establish a SARSEP-IRA, the employer should
complete and submit Form 5305-SEP, and Schedule B, contained within the
SEP-IRA/SARSEP-IRA Retirement Plan documents.
To establish a SIMPLE-IRA, the employer should complete and submit Form
5305-SIMPLE, and Schedule A, contained within the First Investors SIMPLE-IRA
Retirement Plan documents.
F. Rollover IRA
You can establish a rollover IRA sccount with proceeds from the distribution
from another IRA you maintain. Only one IRA to IRA rollover can be made from an
IRA each year. A separate account for your IRA rollover will not be established
unless you so instruct us in writing. Please submit a letter of instruction, and
if you are establishing a new IRA account, a First Investors IRA Application.
G. Direct Transfer IRA
You can establish a rollover IRA account by having another IRA you maintain
directly transferred by the current custodian to First Investors. An unlimited
number of direct transfers of IRA accounts may be made each year. A separate
account for your transferred IRA will not be established unless you so instruct
us in writing. Please submit a letter of instruciton, First Investors IRA
Transfer Form, and if you are establishing a new IRA account, a First Investors
IRA Application.
H. Qualified Plan Rollover IRA
You can establish a rollover IRA account to hold the proceeds from a
distribution from an employer's qualified retirement plan. By making a "direct
rollover" from the plan to a First Investors IRA, you avoid income tax, any
penalty on pre-59 1/2 withdrawals, and 20% federal income tax withholding.
Please consult with your tax advisor as to whether your qualified plan rollover
IRA should be established as a separate IRA. A separate account for your
qualified plan rollover will not be established unless you so instruct us in
writing. Please submit a letter of instruction, First Investors IRA Transfer
Form, and if you are establishing a new IRA account, a First Investors IRA
Application.
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<PAGE>
6. ROLLOVER CONTRIBUTIONS
A rollover is a tax free transfer of cash or other assets from one retirement
program to another. There are two types of rollover contributions to an IRA. The
first type involves the transfer from one IRA to another IRA. The second type
involves the transfer of assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan to an IRA. A rollover contribution
is neither includible in your income nor deductible. Unlike annual
contributions, rollover contributions are not subject to the yearly $2,000 (or
$2,250 in the case of the Spousal IRA) or 100% of compensation limitation.
A. IRA to IRA Rollover and Trustee to Trustee Transfer
In order to qualify for tax-free treatment you must make a rollover contribution
from one IRA to another IRA within 60 days after you receive the distribution
from the first IRA. In addition, if the assets distributed from your IRA are
property other than cash, the identical property must be contributed to your new
IRA in order to qualify as a rollover contribution. 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. Amounts not rolled over may also be
subject to the 10% penalty tax on premature distributions.
Rollovers between IRAs are allowed only once a year. The one year period begins
on the date that you receive the IRA distribution and not on the date it is
rolled over into another IRA. A rollover from one IRA to another should not be
confused with a transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee (trustee to trustee transfer). This is not
considered a rollover and, consequently, is not affected by the limitation on
rollovers to once a year.
In order to qualify for tax-free treatment, it is not necessary to rollover the
entire amount of the distribution which you receive. It is permissible for you
to rollover a portion of the distribution and to keep the remainder. However,
the amount you retain will be taxed in the year of receipt as ordinary income.
In addition, the amount retained may be subject to the 10% tax on premature
distributions.
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B. Retirement Plan to IRA Rollover
You may also be eligible for tax-free rollover treatment when you receive a
distribution from a tax-sheltered annuity or custodial account or from your
employer's qualified retirement plan. For retirement plan distributions paid to
you before January 1, 1993, in order to qualify for tax-free rollover treatment
a distribution from a qualified retirement plan must constitute either a
"qualified total distribution" or "partial distribution".
A "qualified total distribution" means one or more distributions:
(i) which are paid to you within a single taxable year on account of the
termination of your employer's qualified plan, or in the case of a profit
sharing or stock bonus plan, a complete discontinuance of contributions;
(ii) which constitute a "lump sum distribution" within the meaning of the
Internal Revenue Code; or;
(iii) which constitute a distribution of your accumulated deductible employee
contributions.
In order for a qualified total distribution to be eligible for tax-free rollover
treatment, such distribution must be transferred to an IRA within 60 days of
when you receive it. In addition, if such distribution consists of property
other than money, the identical property must be transferred to your IRA in
order to qualify as a rollover contribution. However, you are permitted to sell
the property and transfer the proceeds of the sale to the IRA within 60 days of
receipt of the distribution. In order to be eligible for tax-free treatment, it
is not necessary to rollover the entire qualified total distribution. In fact,
you are not permitted to roll over any after-tax employee contributions which
you have made to your employer's qualified retirement plan. However, the
earnings attributable to such after-tax contributions may be rolled over. Any
portion of a qualified total distribution which you retain, except your own
after-tax contributions, will be subject to current income tax.
If you receive a qualified total distribution from your employer's plan and roll
over part or all of it into an IRA, you may later roll over those assets into a
new employer's plan (if the plan permits you to do so). Under such
circumstances, your IRA serves as a holding account or conduit for those assets.
However, you may roll over those assets into another qualified employer's plan
only if they consist of funds received from the first employer's plan and
earnings on those funds, and you did not mix other IRA contributions or funds
from other sources with them.
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<PAGE>
If you receive a "total distribution," within the meaning of the Internal
Revenue Code, from a Section 403(b) annuity or custodial account you may also
make a tax-free rollover to an IRA if such distribution is transferred to an IRA
within 60 days after you receive it.
The term "partial distribution," means a distribution during a single tax year
which represents at least 50% of the balance due you from a qualified retirement
plan or tax-sheltered annuity or custodial account and which is paid to you:
(i) Because you separated from service with the employer;
(ii) Because you became disabled while working for the employer; or
(iii) Because of the death of your spouse while he or she was covered under the
plan and you are named as the beneficiary.
You may elect to roll over tax-free, all or part of a partial distribution from
a qualified plan or a tax-sheltered annuity or custodial account into an IRA.
Such rollover must occur within 60 days of the receipt of such partial
distribution in order to qualify for tax-free treatment. A rollover of a partial
distribution should not be confused with partial rollovers of a total
distribution from an employer's qualified plan. If you roll over a partial
distribution from a qualified plan, you will lose the ability to use special
income averaging on subsequent distributions from the qualified plan.
In order to properly roll over a qualified total distribution or partial
distribution you must make a rollover election, by designating in writing, to
the trustee of the IRA that such amount is to be treated as a rollover
contribution.
If you receive a distribution from your spouse's employer's retirement plan
pursuant to a "qualified domestic relations order", you may be eligible to make
a tax-free rollover to an IRA. In order to obtain tax-free treatment, the
balance to your credit under the retirement plan must be paid or distributed to
you within one taxable year. You may rollover any portion of the cash or
property received in such distribution to an IRA. In the case of a distribution
of property other than cash, the property received must be rolled over. It
should be noted that there is no specific requirement that the rollover be made
within 60 days from receipt of the distribution as in the case of other
rollovers.
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For retirement plan distributions payable to you on or after January 1, 1993,
any eligible rollover distribution, as defined by the Unemployment Compensation
Amendment of 1992, may be rolled over into an IRA or other eligible retirement
plan. Your employer is required to provide you with a notification after you
terminate employment which explains the new rollover rules.
First Investors Corporation (including its affiliates), Administrative Data
Management Corp. and First Investors Savings Bank, S.L.A. takes no
responsibility, nor assumes any liability for any rollover made by you which
does not qualify as a tax-free rollover under the Internal Revenue Code. Since
penalty taxes may be imposed (in addition to other possible negative tax
consequences) when invalid rollovers are made to an IRA, please consult with
your tax advisor to ensure that any rollover is made in the appropriate manner.
7. DISTRIBUTIONS
For taxable years beginning after 1984, the IRA distribution rules are similar
to the rules for distributions from qualified retirement plans, pursuant to
regulations to be issued by the Secretary of the Treasury. Proposed regulations
were issued on July 24, 1987 relating to required distributions from IRAs. This
Disclosure Statement does not discuss the proposed regulations. If you would
like specific advice regarding the proposed regulations you should confer with
your attorney or other qualified tax advisor.
Your IRA is intended to provide a source of income to you after attainment of
age 59 1/2 or if you become disabled. Distributions other than amounts rolled
over into another IRA or qualified plan are taxed as ordinary income in the year
received by you. With certain exceptions, distributions which occur prior to age
59 1/2 will be subject to a 10% additional tax on premature distributions.
Please refer to Section 8 for a discussion of the distributions occurring prior
to age 59 1/2 which are not subject to the 10% tax.
While distributions from your IRA may commence without penalty for early
withdrawal at any time after you attain age 59 1/2, distributions must commence
on or before the first day of April of the year following the year in which you
attain 70 1/2. Distributions must be paid to you in accordance with one of the
following methods:
(i) A single lump sum payment; or
(ii) Substantially equal monthly, quarterly, semi-annual, or annual payments
over a period certain not extending beyond your life expectancy or the joint and
last survivor expectancy of you and your designated beneficiary.
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Notwithstanding that distributions may have commenced pursuant to option (ii)
above, you may receive a distribution in the balance in your IRA at any time.
Distributions also must meet certain minimum distribution requirements. Either
the entire interest in the IRA must be distributed before April 1 following the
year you attain age 70 1/2 or payments must be made over a period no greater
than your life expectancy or over the life expectancy of you and your designated
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 0% tax may be waived by the Internal Revenue Service.
At the time that you establish your IRA you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right
prior to the complete distribution of your IRA to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate shall
be treated as your designated beneficiary. If you should die after the
distribution of your IRA has commenced, the remaining portion of your IRA must
continue to be distributed at least as rapidly as under the method of
distribution being used prior to your death. If you should die before the
distribution of your IRA has commenced, your entire interest in your IRA must be
distributed in accordance with one of the following provisions:
(i) The entire balance of your IRA is distributed within five (5) years after
your death;
(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments over the
life expectancy of such beneficiary commencing no later than one (1) year after
your death;
(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive substantially equal periodic payments over his or her life
expectancy, commencing at any date prior to the date on which you would have
attained age 70 1/2;
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(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his or her own IRA and receive distributions under
the general distribution rules discussed above. In addition to the distributions
described above, you may also receive a distribution from your IRA for the
purpose of transferring the assets into another individual retirement account,
individual retirement annuity, or qualified retirement plan. A rollover
distribution is not taxable to you provided that it is properly redeposited
within 60 days of receipt. Furthermore, any required distributions may not be
rolled over. Please refer to Section 6 for a discussion of the requirements
which must be satisfied in order to qualify for tax-free rollover treatment.
8. BENEFICIARY DESIGNATION
You may name Primary and Contingent beneficiaries to receive your First
Investors IRA accounts in the event of your death. Unless you instruct
otherwise, your Beneficiary Designation shall apply to all your First Investors
IRA accounts. Any new or subsequent Beneficiary Designation you file with First
Investors will therefore (unless you instruct otherwise) revoke and replace any
prior Beneficiary designations we have on file.
Upon your death, payment of your IRA accounts will be made to your Primary
Beneficiaries who survive you, in equal shares. In the event of a Primary
Beneficiary's death, his or her interest in your IRA accounts will be divided
proportionately among your surviving Primary Beneficiaries, based on their
percentages indicated. If no Primary Beneficiary survives you, then payment of
your IRA accounts shall be made to your Contingent Beneficiaries named by you,
who survive you.
In the event that no Primary Beneficiary or Contingent Beneficiary survives you,
or no Beneficiary Designation is on file with First Investors on the date of
your death, then your IRA accounts will be paid to your estate.
9. TAX TREATMENT OF DISTRIBUTION
A. Income Tax
As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA, the
portion of your IRA distribution consisting of non-deductible contributions will
not be taxed again when received by you. If you make any non-deductible IRA
contributions, each distribution from your IRA will consist of a nontaxable
portion (return of non-deductible contributions) and a taxable portion (return
of deductible contributions, if any, and earnings). Thus you may not take a
distribution which is entirely tax free. The following formula is used to
determine the nontaxable portion of your distributions for a tax year:
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Non-deductible
Contributions x Total Distribution= Nontaxable
- ------------- (for the year) Distributions
Year end IRA (for the year)
Balance
+ total distribution
(for the year)
The following illustrates how you will determine the nontaxable portion of your
distributions for a taxable year.
Example: Ms. Gray has made the following contributions to her IRA:
YEAR DEDUCTIBLE NON-DEDUCTIBLE
- ---- ---------- --------------
1984 $2,000 $0
1985 $2,000 $0
1986 $2,000 $0
1987 $1,000 $1,000
1988 $0 $2,000
----- -----
$7,000 $3,000
During 1989, Ms. Gray receives a $1,000 distribution from her IRA. On December
31, 1989 the total value of Ms. Gray's IRA is $14,000. the nontaxable portion of
the distribution she received during 1989 is determined as follows:
$3,000 x $1,000 = $200
- ----------------
$14,000 + $1,000
To determine your year end IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as simplified employee
pension (SEP) IRAs, and rollover IRAs. You also add back the distributions taken
during the year.
A single lump sum distribution from your IRA is not entitled to ten year
averaging, five year averaging or capital gains treatment accorded lump sum
distributions from a qualified plan.
B. Early Withdrawal Tax
In general, distributions from your IRA which occur prior to you attaining age
59 1/2 will be subject to adverse tax consequences. Not only will such
distributions be fully taxable to you as ordinary income, such distributions
will also be subject to a 10% additional tax.
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In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death,
disability and divorce will be exempt from the 10% additional tax. You are
considered disabled if you are "unable to engage in any substantial gainful
activity because of a medically determinable physical or mental impairment which
can be expected to result in death or to be of long, continued, and indefinite
duration." In addition, distributions before age 59 1/2 are not subject to the
10% tax if made in the form of substantially equal periodic payments and are
made over your life expectancy or the joint life expectancies of you and your
designated beneficiary.
Distrbituons commencing in 1997 which are used to pay medical expenses in excess
of 7.5% of the individual's adjusted gross income shall be exempt from the 10%
penalty. In addition, penalty-free distributions may be taken on or after
January 1, 1997 to purchase health insurance if an individual has been receiving
unemployment compensation for 12 weeks or more. Please see Section 5.E for
information about the 25% penalty which can apply to early withdrawals from a
SIMPLE-IRA.
C. Excess Distributions Excise Tax
A 15% excise tax is imposed on annual distributions from IRAs and other
tax-favored retirement arrangements to the extent that such distributions in the
aggregate exceed $150,000 during any year. For certain qualifying "lump-sum
distributions" the threshold amount, above which the excise tax is applied, is 5
times the applicable threshold for annual distributions. A similar tax is
imposed upon your estate if you die with "excess accumulations". There are
special rules which may apply if you had substantial (greater than
$562,500)total accrued retirement benefits as of August 1, 1986 and you made a
special election ("grandfather" election) by the due date of your 1988 Federal
income tax return. You should discuss these matters with your tax advisor.
D. Gift Tax
Your designation of a beneficiary for your IRA will not be treated as a gift and
will not subject you to Federal gift taxes.
E. Estate Tax
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.
10. PROHIBITED TRANSACTIONS
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You or your beneficiary may not participate in any transaction with your IRA
which is prohibited by law. Such "prohibited transactions" include but are not
limited to:
(i) the sale, exchange, or lending of any property;
(ii) lending of money or other extension of credit;
(iii) furnishing of goods, services, or facilities;
(iv) the use of income or assets of the IRA by you or your beneficiary; and
(v) the use of your IRA as security for a loan.
If such transactions are engaged in, your IRA will be disqualified and will lose
its tax-exempt status. Under such circumstances, your IRA will be considered to
have been distributed to you and will be subject to the income and additional
taxes discussed above.
11. REPORTING REQUIREMENTS
If a transaction has occurred upon which a special penalty tax is imposed, such
as an excess contribution, a premature distribution or a failure to make a
timely distribution, you are required to file Form 5329 with your annual income
tax return for such year. Form 5329 need not be filed if the only activity for
the year is the making of contributions or the distribution of permissible
benefits.
12. IRS APPROVAL
This IRA is a model IRA which follows the approved document considered by the
Internal Revenue Service to meet the applicable requirements of the Internal
Revenue Code. Therefore, the Internal Revenue Service will not issue a formal
determination as to the qualified status of your IRA. Further information can be
obtained from any office of the Internal Revenue Service. Please be aware that
the Internal Revenue Service's approval is a determination only as to the form
of the IRA does not represent a determination as to the merits of the IRA.
13. IRA BALANCE
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon the market values of the securities in the
mutual fund investment portfolio, which are subject to fluctuations; therefore,
growth in the value of your IRA cannot be projected or guaranteed. Dividends
from net investment income and capital gains distributions paid by the mutual
funds selected will be reinvested in fund shares at the applicable reinvestment
price as of the respective reinvestment dates and such additional shares will be
credited to your IRA.
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14. FEES, CHARGES and COMMISSIONS
A. IRA Custodian Fees
The Custodian of your IRA charges $7.00 for each distribution other than
periodic cash payments; and $1.00 for each periodic cash payment. These fees are
applicable regardless of the manner in which your IRA is funded. The Custodian
reserves the right to waive any of its fees at any time and to revise its fee
schedule upon written notice to the IRA holder.
B. Mutual Fund Commissions
If you fund your IRA by the direct purchase of Class A mutual fund shares, a
maximum sales commission of 6.25% of the offering price may be charged. Class A
share commissions range from 6.25% to 1.5% of the fund's offering price. Reduced
Class A share commissions apply for purchases of more than $25,000 under the
fund's Rights of Accumulation Privilege or a Letter of Intent. If you fund your
IRA by the direct purchase of Class B shares, purchases will be transacted at
the fund's net asset value and a contingent deferred sales charge may be imposed
upon redemption of such shares.
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To Establish a First Investors IRA
1 To Establish a First Investors Individual Retirement Account (IRA):
-------------------------------------------------------------------
Submit the following documents:
1. Completed and signed First Investors IRA Master Account
Application.
2. Check or money order in the amount of the IRA contribution.
Make check payable to:
First Investors Corporation
FBO
Name of Shareholder
3. Send applicable documents to:
Administrative Data Management Corp.
Attention: Retirement Department
581 Main Street
Woodbridge, NJ 07095-1198
2 Custodial Fee (No Installation or Annual Fees):
-----------------------------------------------
Each periodic distribution will be charged $1.00; other distributions,
including a single distribution of the entire account will be charged $7.00;
extra services may require special fees which will be detailed upon receipt of a
specific written request outlining the service to be performed. Any of the fees
may be waived by the Custodian at any time. The fee schedule is subject to
change by the Custodian upon 45 days' notice to the individual.
You should retain the Disclosure Statement and Custodial Agreement.
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CUSTODIAL AGREEMENT
INDIVIDUAL RETIREMENT ACCOUNT
FORM 5305-A
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), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)). 2. No part of the custodial funds may be invested in
collectible (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.
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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
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(ii) Be distributed in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the requirements
of section 408(b)(3) and its related regulations has irrevocably commenced,
distributions are treated as having begun on the Depositor's required beginning
date, even though payments may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been distributed
and if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
5. In the case of 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.
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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 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.
ARTICLE VIII
1. By execution of the First Investors Individual Retirement Account Application
(the "Application"), the individual named therein (the "Depositor") has applied
for an Individual Retirement Account (the "Account") described in Section 408(a)
of the Internal Revenue Code of 1986 (the "Code") in order to provide for his or
her retirement and for the support of his or her beneficiaries after death. The
Custodian, by executing the Application, has established an Account for the
Depositor and has accepted its appointment as Custodian of the account. The
Depositor and the Custodian hereby agree that the Account shall be governed by
the provisions of the Agreement and the Application which is made a part hereof.
The Account is created for the exclusive benefit of the Depositor and his or her
beneficiaries.
2. (a) Annual contributions must be made in cash by check or money order payable
to "First Investors Corporation" and may be made in one or more payments;
provided, however, that no such payment shall be smaller in amount than the
minimum amount, if any, required for investment in the securities of the
Designated Investment Company. The Custodian shall have no obligation to compel
the Depositor to make any contribution, nor shall it be required to notify the
Depositor of the existence or amount of an "excess contribution", if any, as
that term is defined in Section 4973(b) of the Code. Annual contributions may be
made to the Account for the benefit of the Depositor by his or her employer.
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<PAGE>
(b) Contributions which qualify as "rollover contributions" described in Section
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code may be made
to the Account; provided, however, that such contributions consist solely of
cash (made by check or money order payable to "First Investors Corporation") in
an amount no smaller than the minimum amount, if any, required for investment in
the securities of the Designated Investment Company, and/or securities of a
Designated Investment Company. The Depositor shall identify rollover
contributions as such in writing and the Custodian shall rely on such
identification. A contribution identified in writing by the Depositor as a
rollover contribution from a qualified retirement plan shall not constitute an
Account separate from any Account established hereunder to which annual
contributions have been or will be made, unless the Depositor instructs the
Custodian otherwise.
3. The Custodian shall maintain a record of the Account for the Depositor
reflecting his or her contributions, the investment thereof, and any accretions
upon such investments.
4. (a) The Custodian shall invest all such cash contributions less unpaid
custodial fees in the securities of the Designated Investment Company specified
by the Depositor in the Application and the Custodian or its nominee shall be
the holder of record, and the Depositor shall be the beneficial owner of all
such securities and any other property in the Account. The term "Designated
Investment Company" shall mean a registered investment company of the open-end
management type or unit investment trust type, the securities of which are
sponsored, distributed and/or underwritten by First Investors Corporation,
provided however, that the purchase of a Periodic Payment Plan with insurance
shall not be permitted. The Depositor (or following the death of the Depositor,
his or her beneficiary) may, by instructions given to the Custodian, determine
the investment in which his or her Account is to be invested or reinvested at
any time and from time to time. The Depositor must provide specific instructions
for specific purchases, sales, exchanges, and other transactions. By giving such
instructions to the Custodian, the Depositor will be deemed to have acknowledged
receipt of the prospectus, if any, for any shares or other investment vehicles
in which the Depositor directs that the Custodian invest assets in his or her
Account. The Custodian shall be responsible for executing such instructions
promptly; provided, however, that neither the Custodian, the transfer agent,
Administrative Data Management Corp., nor any affiliated company shall be
obligated to invest any portion of the Depositor's initial contribution to his
or her Account until seven (7) calendar days have elapsed from the date of
acceptance of the application or agreement by or on behalf of the Custodian.
Investments held in the Account may be divided between or among more than one
Designated Investment Company.
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<PAGE>
(b) All cash dividends and capital gains distributions received upon assets in
the Account shall be reinvested in the securities of the Designated Investment
Company and credited to the Account. In the event that, with respect to any such
dividends and distributions, the Custodian as holder of record may elect to
receive such dividend or distribution in either additional shares, cash or other
property, the Custodian shall elect to receive such distribution in additional
shares. Sales charges attributable to the acquisition of securities shall be
charged to the Account for which such securities are acquired. No part of the
funds in the Account shall be invested in life insurance contracts.
(c) The Custodian or its agent shall deliver, or cause to be executed and
delivered, to the Depositor all notices, prospectuses, financial statements,
proxies, voting instruction cards, and proxy soliciting material relating to
securities held in the Account. The Custodian in its capacity as Custodian
hereunder or its agent shall vote all shares of the Designated Investment
Company held hereunder in accordance with the written instructions of the
Depositor.
5. The Depositor shall have the right, prior to completion of distribution of
his or her Account, by written notice to the Custodian or its agent, to
designate, revoke, and to change a designation of a beneficiary or beneficiaries
of any distribution from the Account following the death of the Depositor, and
if no such beneficiary is designated in accordance herewith the Depositor's
beneficiary shall be his or her estate.
6. The Depositor shall not use the Account or any portion thereof as security
for a loan, nor shall the individual or his or her beneficiary engage in any
transaction prohibited by Section 4975 of the Code.
7. (a) Neither the Custodian, its agent nor any affiliates shall be responsible
for any liability arising out of this Agreement except such liability as is
occasioned by the negligence or willful misconduct of the Custodian, its agent
or affiliates. Neither the Custodian, its agent nor any affiliates shall be
responsible for any action or no action taken at the Depositor's request and
each may rely upon and shall be protected in acting upon any written order from
the Depositor or any other notice, request, consent, certificate or other
instrument reasonably believed by the Custodian, its agent or any affiliate to
be genuine and to have been properly executed. Neither the Custodian, its agent
nor any affiliates shall be liable to pay interest on any cash or cash balances
maintained in the Account which has not been invested.
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<PAGE>
(b) Neither the Custodian, its agent nor any affiliates shall be obligated to
defend or engage in any suit with respect to the Account unless each shall first
have agreed in writing to do so and shall have been fully indemnified to the
satisfaction of the Custodian, its agent and/or any affiliates. The Depositor
shall at all times indemnify and hold harmless the Custodian, its agent and any
affiliates from any liability arising from any action taken by the Custodian,
its agent or any affiliates upon the written instructions of the Depositor.
(c) The Custodian may resign at any time upon sixty (60) days' notice in writing
to the Depositor and may be removed by the Sponsor (First Investors Corporation)
or the Depositor at any time upon thirty (30) days' written notice to the
Custodian or such shorter notice as may be acceptable to the Custodian, which
successor shall be a bank or such other qualified person under Section 408(a)(2)
of the Code. If within sixty (60) days after the Custodian's resignation or
removal the Depositor or the Sponsor has not appointed a successor custodian
which has accepted such appointment, the custodian shall, unless it elects to
terminate the Account, appoint such successor itself. Upon receipt by the
Custodian of written notice of acceptance of such appointment by a successor
custodian, the Custodian or its agent shall transfer and pay over to such
successor the assets of the Account and all records pertaining thereto. In
connection with such transfer, however, the Custodian or its agent is authorized
to reserve such sum of money as is necessary for the payment of its fees.
(d) The Custodian shall terminate the Account if within sixty (60) days after
the removal or resignation of the Custodian no qualified successor custodian has
notified the Custodian of its acceptance to act. Termination of the Account
shall be effected by distributing the assets of the Account by a single sum
payment in cash or in kind as the Depositor may elect. Upon completion of such
distribution, the Custodian, its agent and any affiliates shall be relieved from
all further liability with respect to all amounts so distributed.
8. (a) The Depositor agrees that the fees of the Custodian as set forth in the
Application shall be paid when due. Such fees may be waived by the Custodian at
any time and may be revised by the Custodian upon forty-five (45) days' written
notice to the Depositor. Custodial fees which have been revised in accordance
with this Section will become legally binding upon the Depositor unless he or
she objects by sending written notice of such objection to the Custodian within
forty-five (45) days of the date of the Custodian's or its agent's notice to the
depositor of such revision.
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9. The Custodian appoints Administrative Data Management Corp., the transfer
agent for each of the Designated Investment Companies hereunder, as its agent
for receiving and processing contributions, transferring assets of the Account,
processing shareholder correspondence (e.g., revocations and designation of
beneficiaries), sending required notices and other documents relating to the
Account and voting shares in the Account hereunder.
10. The Federal Deposit Insurance Corporation (FDIC) does not insure amounts
invested in an Individual Retirement Account merely because the trustee or
custodian, such as the Custodian, is an institution the accounts of which are
covered by such insurance. Only investments in the accounts of such institutions
themselves are insured by the FDIC subject to its rules and regulations.
11. This Agreement may be amended by the Sponsor (First Investors Corporation)
by submitting a copy of any such amendment to the Depositor and to the Custodian
at least thirty (30) days in advance of the effective date of any such
amendment; provided, however, that no such advance submission shall be required
in the case of any amendment that may be required by the Internal Revenue
Service, from time to time, so that the Account shall remain an Individual
Retirement Account under Section 408 of the Code. For purposes of Article VII, a
Depositor shall be deemed to have consented to any amendment not required by the
Internal Revenue Service if he or she does not terminate the Account before the
effective date of such amendment.
12. This Agreement shall be construed, administered and enforced according to
the laws of New Jersey.
GENERAL INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF THE FORM
Form 5305-A is a model custodial account agreement that meets the requirements
of section 408(a) of the Code 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.
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Individuals may rely on regulations for the Tax Reform Act of 1986 compliance 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 receive
from your custodian, see 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) of the Code, or any person who has the approval of the
IRS to act as custodian.
Depositor - The Depositor is the person who establishes the IRA 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 required only for an IRA
for which a return is filed to report unrelated business taxable income. 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 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) of the Code have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that re agreed to by the Depositor and the 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 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.
29
<PAGE>
IMPORTANT INFORMATION
This IRA Master Account Application applies to all accounts registered
identically in funds sponsored by First Investors Corporation and its
affiliates.
Section 4. I understand that through accumulated investments I can reduce my
sales charges on purchases of Class A shares. In the next 13 month period, I
plan to invest in shares of one or more First Investors eligible funds the
aggregate amount checked in this application. I understand that I may combine
Class A and Class B shares of any eligible (including Class B shares of the
money market funds) funds to qualify for this reduced sales charge. I hereby
irrevocably appoint First Investors Corporation ("FIC") my agent and my attorney
with full power to redeem any shares held in escrow, if necessary. I understand
that if the amount indicated is not invested within 13 months, the reduced sales
charge does not apply.
Section 8. I wish to establish an automatic payroll investment program and
authorize my employer to initiate credit entries of amounts deducted from my pay
to an account at First Financial Saving Bank, S.L.A. ("FFS"). I further
authorize FFS to accept any such funds and to transfer them to First Investors
for investment in the First investors account(s) designated in the application
or as changed by my written instructions to FIC. FFS shall have no
responsibility for the correctness thereof or for determining the existence of
any further authorization relating hereto. I agree that neither FFS, FIC nor any
affiliates will be liable for any loss, liability, cost or expense from acting
upon such instructions. I understand that in order to terminate this
authorization I must give written notice to my employer.
--------
Section 9. I authorize FIC to initiate debit entries to my bank account listed
in this application. Investments will be made the same day my bank account is
debited or, if a weekend or holiday, on the following business day. If such
debit is dishonored by the bank upon presentation, FIC may discontinue this
service and cancel the shares purchased and charge me for any loss.
Section 10. I authorize Administrative Data Management Corp. ("ADM"), as
transfer agent, to accept and act upon telephone instructions from myself, or my
FIC Registered Representative (if I have so authorized), to effect exchanges of
shares among eligible funds owned by me.
If I authorize my FIC Registered Representative to effect telephone exchanges
upon my instruction, I understand that this authorization applies to my
representative only as long as the Registered Representative is assigned to my
account(s), according to the books and records of FIC. If my Registered
Representative is replaced with a new FIC Registered Representative by FIC, the
telephone exchange privileges assigned to my former representative will
automatically be transferred to the new FIC Registered Representative. Telephone
exchange privileges may be modified or terminated at any time at the sole
discretion of FIC, ADM, or the fund(s). This authorization may be terminated by
submitting written notice to ADM. Please allow 5 days processing time after
receipt.
30
<PAGE>
In acting upon telephone instructions, First Investors and the Funds use
procedures which are reasonably designed to ensure that such instructions are
genuine, such as (1) obtaining some or all of the following information: account
number, name and social security number, mother's maiden name, last elementary
school attended; (2) recording all telephone instructions; and (3) sending
written confirmation of each transaction to my address of record. I understand
that this policy places the entire risk of loss for unauthorized or fraudulent
transactions on me, except that if First Investors Corporation, the Funds, or
their affiliates do not follow reasonable procedures, some or all of them may be
liable for any such losses.
Prior to making an exchange, I have received and read the prospectus of the fund
into which the exchange is being made. Only one telephone exchange is permitted
within any 30 day period for each account authorized. Each of the First
Investors funds reserves the right to change or terminate the exchange
privilege. An administrative fee may be charged on exchanges and may be waived
at any time.
Executive Investors Funds
If I have purchased Executive Investors Funds, I have received the required
Disclosure Form.
31
FIRST INVESTORS CORPORATION
403(b) CUSTODIAL ACCOUNT AGREEMENT
FIRST FINANCIAL SAVINGS BANK, S.L.A., CUSTODIAN
FOR EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND FOR CUSTODIAL ACCOUNTS
NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
The Custodial Account established by the Employer is created pursuant to Section
403(b)(7) of the Internal Revenue Code of 1986, as amended, and regulations
thereunder (collectively referred to as the "Code") in order to provide a
treatment benefit for the Employee named in the 403(b) Custodial Master Account
Application, which is made a part of this Agreement ("the Application"), solely
through investment in the securities of a regulated investment company.
Any Employer that establishes this Custodial Account must be an organization
described in Section 403(b)(1)(A) of the Code. The Employer represents that the
Custodial Account is exempt from the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA") because it is a governmental plan as
defined in Section 3(32) of ERISA, a church plan as defined in Section 3(33) of
ERISA, or because Employer involvement with the Custodial Account is limited in
accordance with Section 2510.3-2(f) of the Department of Labor regulations.
In the event that the Custodial Account is not exempt from the requirements of
ERISA due to the Employer making contributions to the Account (as distinguished
from the Employees' salary reduction contributions) or for any other reason,
then in such event it shall be the Employer's responsibility to comply with the
relevant reporting, documentation, discrimination, and disclosure requirements
applicable under the Code and ERISA.
I. CONTRIBUTIONS
Contributions must be made by check or money order payable to First Investors
403(b) and may be made in one or more payments, provided however, that no such
payment shall be smaller in amount than the minimum amount, if any, required for
investment in the securities of the selected Designated Investment Company. The
Custodian shall have no obligation to compel the Employer or the Employee to
make any Contribution, nor shall the Custodian be required to notify the
<PAGE>
Employer or Employee if any Contribution made exceeds the "exclusion allowance"
under Section 403(b)(2) or limitations under Sections 402(g) and 415 of the
Code. In no event may contributions to the Custodial Account and all other
plans, contracts or arrangements of the Employer exceed the limitation in effect
under Section 402(g)(1) of the Code.
A transfer of monies from an existing custodial account qualified under Section
403(b) of the Code may be made to the Custodial Account provided that the terms
of such custodial account or annuity do not disallow such transfer. Neither
First Investors Corporation, Administrative Data Management Corp., the
Custodian, nor any of their affiliates or agents shall be liable in any manner
if a transfer is made by an Employee from a 403(b) account that does not allow
for such a transfer. Any monies transferred hereunder shall be invested by the
Custodian in accordance with written instructions received pursuant to Section
IX. hereunder provided, however, that amount transferred may be invested only in
securities of a Designated Investment Company as defined in Section III. below.
Written instructions accompanying any such transfer shall state that the amount
being transferred is a transfer from a 403(b) Custodial Account or annuity, as
the case may be.
II. ACCOUNT
The Custodian shall maintain a Custodial Account (the "Account") reflecting
Contributions and any transfers of cash made in accordance with Section I.
above, the investment thereof, and any income gains, or losses attributable to
such investments. The interest of the Employee in the Account shall at all times
be non-forfeitable, and the assets therein shall not be commingled with the
property of others, provided however, that investment in securities of a
Designated Investment Company shall not be considered commingling. Contributions
to the Account, and the income thereon, may not be used for, or diverted to,
purposes other than for the exclusive benefit of Employees and their
beneficiaries.
III. INVESTMENTS
The Custodian shall invest all contributions less unpaid custodial fees (if any)
in the securities of the Designated Investment Company(ies) specified on the
Application, and the Custodian or its nominee shall be the holder of record, and
the Employee shall be the beneficial owner, of all such securities and any other
property
<PAGE>
in the Account. The term "Designated Investment Company" shall mean a registered
investment company of the open-end management or unit investment trust type, the
securities of which are sponsored, distributed and underwritten by First
Investors Corporation, all of which are regulated investment companies within
the meaning of Section 851(a) of the Code. The selection of Designated
Investment Company with respect to both the investment of Contributions
previously made and those made in the future may be changed upon receipt by the
Custodian of Written Instructions, as provided in Section IX. below, requesting
such change, subject to the requirements that the minimum investment in any
Designated Investment Company shall not be smaller than the minimum amount, if
any, required for investment in the securities of any selected Designated
Investment Company. Investments held in the Account may be divided between or
among more than one Designated Investment Company. The Custodian may charge an
annual maintenance fee for each Designated Investment Company in the Account.
All cash dividends, capital gains, and dividend distributions received upon
assets in the Account shall be reinvested in the securities of the selected
Designated Investment Company and credited to the Account. In the event that,
with respect to any such dividends and distributions, the Custodian as holder of
record may elect to receive such distribution in additional shares, cash or
other property, the Custodian shall elect to receive such distribution in
additional shares. Sales and other charges attributable to the acquisition of
securities shall be charged to the Account for which such securities are
acquired.
The Custodian shall deliver or cause to be delivered to the Employee all
notices, prospectuses, financial statements, proxies, voting instruction cards
and proxy soliciting requests relating to the securities held in the Account.
The Custodian in its capacity as Custodian hereunder shall not vote any shares
of the Designated Investment Company held hereunder except in accordance with
the written instructions of the Employee.
IV. DISTRIBUTIONS
The Custodian will distribute the assets of the Account, in cash or in kind,
upon receiving Written Notice, in accordance with Section IX. below, of the
Employee's retirement disability (as defined in Section 72(m)(7) of the Code),
attainment of age 59 1/2, financial hardship or separation of service. Employees
eligible for a distribution shall receive a Notice from the Custodian. Such
<PAGE>
Notice shall inform the Employee of the tax consequences of a 403(b)
distribution, the Employee's right to elect to make a Direct Rollover, and the
20% mandatory income tax withholding that will be applied against any "Eligible
Rollover Distribution" which is not directly rolled over to an eligible
retirement plan.
An "Eligible Rollover Distribution" is, in general, the taxable portion of any
distribution to an eligible employee, which is not:
1. a "minimum required distribution" due to attainment of age 70 1/2,
pursuant to Section 401(a)(9) of the Code.
2. a part of a series of equal (or substantially equal) payments made over
either the lifetime (or life expectancy) of the Employee or over the joint
lifetimes (or joint life expectancies) of the Employee and his designated
beneficiary; or
3. a part of a series of equal (or substantially equal) payments for a period
of ten (10) years or more.
An Eligible Rollover Distribution may be transferred by the Employee to an
eligible retirement plan, as a Direct Rollover. An eligible retirement plan is
an Individual Retirement Arrangement (IRA) or another 403(b) plan which accepts
such a transfer.
For distributions on or after January 1, 1989 on account of financial hardship,
only the Employee's salary reduction contribution (and not the income thereon)
may be distributed. Such Written Notice shall be irrevocable and shall specify
the date upon which the distribution shall commence and that the distribution
shall be effected by:
A. a single sum payment, or
B. equal or substantially equal monthly, quarterly or annual payments over a
period certain; which may be based upon, but not exceed, the life expectancy of
the Employee and his or her designated beneficiary. The life expectancy of the
Employee and the Employee's spouse may be recalculated, but not more frequently
than once annually.
The Employee's Account must begin to be distributed to the Employee no later
than April 1 of the year following the year in which the Employee attains age 70
and a half (whether or not the Employee has retired). However, for an Employee
who has attained age 70 1/2
<PAGE>
before January 1, 1988 or for an Employee covered under a governmental plan or a
church plan within the meaning of Section 401(a)(9)(C) of the Code, the required
beginning date is April 1 of the year following the later of the year in which
the Employee attains age 70 1/2 or the year in which the Employee retires.
Upon the death of the Employee, the following distribution provisions shall take
effect:
(a) If the Employee dies after distributions have commenced and before the
entire interest in his or her Account has been distributed, the remaining
portion will be distributed at least as rapidly as under the method of
distribution being used as of the date of the Employee's death;
(b) If the Employee dies before distributions have commenced, the remaining
interest in his or her Account will be distributed within five years after his
or her death or at such time as provided by regulations prescribed by the
Secretary of the Treasury.
(c) Notwithstanding paragraphs (a) and (b) above, if any portion of the
Employee's interest is payable to or is for the benefit of a designated
beneficiary, such portion will be distributed over a period not exceeding the
life expectancy of such beneficiary. Distributions under this paragraph (c)
shall commence within one year following the date of the Employee's death or at
such time as provided by regulations prescribed by the Secretary of the
Treasury.
TO ESTABLISH A FIRST INVESTORS 403(B)
IMPORTANT EMPLOYER INFORMATION:
The Custodial Account must be established by an Employer described in Section
501(c)(3) of the Code which is exempt from tax under Section 501(a) of the Code
or that it is an educational organization described in Section 17(b)(1)(A)(ii)
of the Code, which is operated by a State, a political subdivision of a State,
or an agency or instrumentality of a State.
The Employer should not establish the Custodial Account unless the Account
constitutes a governmental plan as defined in Section 3(32) of the Employee
Retirement Income Security Act of 1974 (ERISA), a church plan as defined in
Section 3(33) of ERISA, or unless the Employer will have limited involvement in
accordance with Department of Labor Regulation Section 2510.3-2(f).
<PAGE>
1. TO ESTABLISH A FIRST INVESTORS 403(b) CUSTODIAL ACCOUNT:
A) Complete the "Amendment to Employment Agreement". Retain one copy
for your records and submit the other copy to your Employer.
B) Submit the following documents:
1. Completed and signed First Investors 403(b) Custodial Master
Account Application.
Send to:
Administrative Data Management Corp.
Attention: Retirement Department
581 Main Street
Woodbridge, New Jersey 07095-1198
2. Your Employer will send your 403(b) contributions to First
Investors to be invested as indicated on your application.
2. CUSTODIAL FEE (NO INSTALLATION OR ANNUAL FEES):
Each periodic distribution may be charged $1.00; other distributions,
including a single distribution of the entire account may be charged $7.00;
extra services may require special fees which will be detailed upon receipt of a
specific written request outlining the service to be performed. Any of the fees
may be waived by the Custodian at any time. The fee schedule is subject to
change by the Custodian upon 45 days' notice to the shareholder.
YOU SHOULD RETAIN THE DISCLOSURE STATEMENT AND CUSTODIAL AGREEMENT.
FIRST INVESTORS 403(b) CUSTODIAL ACCOUNT
FOR EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND FOR CUSTODIAL ACCOUNTS
NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
AMENDMENT TO EMPLOYMENT AGREEMENT
The Agreement is made and entered into on this __________ day of
<PAGE>
__________, 19___, between the Employee and Employer, an organization described
in section 403(b)(1)(A) of the Internal Revenue Code of 1986, as amended, ("the
Code"), in order to provide for the remittance of contributions to the First
Investors Corporation 403(b) Custodial Account maintained by First Financial
Savings Bank, S.L.A. ("the Custodian") for investment in securities of a
regulated investment company as defined in Section 851(a) of the Code.
In consideration of the mutual covenants contained herein and for other good and
valuable consideration, the Employer and Employee, intending to be legally
bound, agree as follows:
(1) The Employee hereby authorizes and directs the Employer, and the Employer
hereby agrees, to reduce the Employee's cash compensation by
____________________ per _______________ and promptly to contribute such amount
at the intervals herein above set forth to the Custodian at 581 Main Street,
Woodbridge, N.J. 07095-1198 by check made payable to "First Investors
Corporation" together with written instructions signed by the Employer setting
forth the name and address of the Employee and a direction that such
contributions be invested in the Designated Investment Companies indicated on
the 403(b) Custodial Master Account Application, with such contributions held by
the Custodian in a non-forfeitable First Investors Section 403(b) Custodial
Account.
(2) The reduction in compensation provided for in paragraph (1) above shall be
effective only with respect to compensation earned by the Employee after the
effective date hereof, which shall be the first date written above, and only
until termination of this Agreement (or upon an amendment to this Agreement
entered into between the Employee and Employer) and with respect to such sums
this Agreement shall be irrevocable.
(3) The Employee hereby releases all rights, present and future, to receive
payment of the Employee's compensation subject to reduction under this Agreement
except: (a) the right of the Employee's estate upon the death of the Employee
while in the Employ of the Employer, and (b) the right of the Employee, upon
termination of employment with the Employer by reason other than death, to
receive all or part of the sum specified in paragraph (1) above for which the
Employee has already rendered services but which contributions have not been
remitted to the Custodian for investment in the securities of a Designated
Investment Company.
<PAGE>
(4) The provisions contained herein shall apply to the employment agreement
currently in effect between the Employer and Employee and to any successor
employment agreements entered into between the parties and shall continue in
force until terminated by the Employee or Employer.
(5) This Agreement may be terminated at any time by the Employee or Employer by
giving thirty days' written notice of termination to the other party. Upon
termination of this Agreement during any calendar year, no new compensation
reduction agreement to provide contributions to purchase securities of a
regulated investment company in a custodial account under section 403(b)(7) of
the Code may be entered into between the Employer and Employee during such
calendar year.
(6) Except as otherwise specifically provided herein, this Agreement may not be
amended or modified. The foregoing sentence notwithstanding, the Employee may
change the Designated Investment Company(ies) or direct that contributions be
invested in additional Designated Investment Companies by giving written notice
thereof to the Employer not less than thirty days prior to the effective date of
such change.
(7) The undersigned Employer represents that it is an Employer described in
section 501(c)(3) of the Code which is exempt from tax under Section 501(a) of
the Code or that it is an educational organization described in Section
170(b)(1)(A)(ii) of the Code which is operated by a State, political subdivision
of a State, or an agency or instrumentality of a State.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and
attested to by its duly authorized officers, impressed with its corporate seal,
and the Employee has hereunto set his or her hand and seal, all on the day and
year first above written.
Attest:
-------------------------------------------
Organization's Name or Employer's Name
- ---------- -------------------------------------------
Signature of Authorized Officer of Employer
-------------------------------------------
Employee's Signature
-------------------------------------------
Employee's Social Security Number
(SEAL)
<PAGE>
FIRST INVESTORS 403(b) CUSTODIAL ACCOUNT
GENERAL INFORMATION
FOR EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND FOR CUSTODIAL ACCOUNTS
NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
I. INTRODUCTION
Section 403(b)(7) of the Internal Revenue Code of 1986, as amended, ("the Code")
permits contributions to be made to a Custodial Account maintained by a bank for
investment in securities of a regulated investment company to provide retirement
benefits for Employees of certain non-profit educational, charitable, humane and
religious organizations. Such contributions, to the extent that they do not
exceed limitations imposed by the Code, need not be included in the income of
the Employee for Federal income tax purposes. The First Investors Corporation
403(b) Custodial Account (the "Custodian Account") is intended to operate within
the provisions of Section 403(b)(7) of the Code. The discussion of Federal tax
consequences which follows is general in nature and not exhaustive, therefore
any Employer or Employee desiring to establish the Custodial Account should
consult with a qualified tax advisor.
The First Investors Corporation 403(b) Custodial Account is not suitable for use
by Employers who are subject to the requirements of the Employee Income Security
Act of 1974 (ERISA). Therefore, an Employer should not adopt the Custodial
Account unless the Account is a governmental plan as defined in Section 3(32) of
ERISA, a church plan as defined in Section 3(33) of ERISA, or unless Employer
involvement with the Account is limited in accordance with Section 2510.3-2(f)
of the Department of Labor regulations.
II. ELIGIBLE EMPLOYEES
Teachers, clerical, administrative, custodial and other employees who perform
services for the following types of tax-exempt organizations are eligible to
participate in the Custodial Account:
<PAGE>
(1) public educational institutions where the Employer is a state, a political
subdivision of a state or an agency or instrumentality of any of the foregoing;
included in this category are public elementary and secondary schools, state
colleges and universities, and (2) organizations described in Section 501(c)(3)
of the Code; specifically foundations, corporations, community chests or funds
organized and operated exclusively for religious, charitable, scientific,
testing for public safety, literary or educational purposes or for the
prevention of cruelty to children or animals. This category includes private,
non-profit, colleges, universities, parochial schools, research foundations, and
domestic welfare and humane societies which are or have been determined to be
Section 501(c)(3) organizations. Effective for years beginning after 1988, in
general, all Employees of the organization (other than a church described in
Section 3121(w)(3)(A) or (B) of the Code) must be eligible to make contributions
to the Custodial Account by salary reduction, except for Employees who
participate in a Section 457 deferred compensation plan, a Section 401(k) cash
or deferred arrangement or another Section 403(b) program. Students and
Employees who normally work less than 20 hours per week may be excluded if
certain conditions are met.
III. CONTRIBUTIONS
Contributions to the Custodial Account may be made by the Employer as a benefit
in addition to cash compensation1, or through the Employer by salary reduction.
If contributions are to be made by salary reduction, the Employer and Employee
must complete and execute two copies of the "Amendment to Employment Agreement".
This form must be completed and executed even if the Employer and Employee are
parties to a formal written contract of employment. One copy should be retained
by each. The periodic contribution to the Account must be inserted in Item 1.
The contribution may be expressed in dollars or as a percentage of the
Employee's compensation, contributions will increase or decrease automatically
as the Employee's compensation is increased or decreased.
The "Amendment to Employment Agreement" is intended to comply with
- --------
1Effective for years beginning 1988, if the Employer (other than a
church within the meaning of Section 312(w)(3)(A) or (B)) makes contributions to
the Custodial Account in addition to or in lieu of contributions pursuant to a
salary reduction agreement, the Custodial Account must satisfy the requirements
of Sections 401(a)(4), (5), (17) and (26), 401(m), and 410(b) of the Code as if
the Account were described in Section 401(a) of the Code.
<PAGE>
applicable Internal Revenue Service requirements relating to contributions
derived from salary reduction. Pursuant to the requirement, the Agreement must
be legally binding between the Employer and Employee, applicable only to
compensation earned after the effective date of the Agreement and, with respect
to such sums, must be irrevocable. In addition, only one salary reduction
Agreement can be made with the same Employer in any one tax year. The agreement
may not be amended but it may be terminated as to compensation earned subsequent
to the time of termination. It will not be considered an amendment of the
Agreement if the selection of Designated Investment Company is changed from time
to time.
In addition, the Employer and the Employee must complete, execute and forward to
First Investors Corporation two copies of the Application for Custodial Account.
First Investors Corporation will forward the copies of the Application to the
Custodian for acceptance. By executing the Application the Employee agrees to
the terms of the Custodial Account Agreement (which includes the Application).
IV. LIMITATIONS ON CONTRIBUTIONS
The Code presently imposes limitations on the excludable amounts which may be
contributed to the Custodial Account for each taxable year of the Employee.
Contributions to the Custodial Account may not exceed 20% of the includable
compensation2 of the Employee for such year multiplied by the number of years of
service2 in the employ of the Employer (but not less than one year), minus
amounts contributed in such previous years which were excludable from the gross
income of the Employee for Federal income tax purposes. (This highlighted
contribution formula shall hereinafter be referred to as the "Exclusion
Allowance".)
In determining "amounts contributed in previous years which were excludable from
the gross income of the Employee for federal income tax purposes" it is
necessary to aggregate Employer contributions made to any qualified pension or
profit sharing, or annuity plan under Sections 401(a) or 403(a), or to a state
retirement system, as well as previous contributions made under Section 403(b)
of the Code.
- --------
2"Includable Compensation" and "Years of Service" are defined terms
under the Code. Please refer to the definitions appearing in Section XI.
<PAGE>
Therefore, to calculate the Exclusion Allowance, Employer contributions for
prior and current years which were excludable from the gross income of the
Employee must be ascertained.
Because the term "includable compensation" does not include the amount of any
contribution to a 403(b) Account to the extent that such contribution does not
exceed the Exclusion Allowance, the maximum permissible contribution for an
Employee who has not more than one year of service with the Employer and for
whom excludable contributions have not previously been made, is one-sixth or 16
2/3% of salary before reduction.
Except as described in Sections V. and VI. below, the Exclusion Allowance is
subject to certain additional overall limitations. The Exclusion Allowance may
not exceed the lesser of: (a) $30,000 (or, if greater, 1/4 of the dollar
limitation in effect for defined benefit plans or (b) 25% of the Employee's
Compensation.2
V. SPECIAL ELECTIVE CONTRIBUTION
ALTERNATIVE FOR CERTAIN EMPLOYEES
While Contributions may continue to be based on the Exclusion Allowance,
Employees of Public Educational Institutions, Hospitals, Health and Welfare
Service Agencies and Home Health Service Agencies will be permitted, subject to
the limitations of Section IV.(a) and Section VI., special elective contribution
alternatives. Under the elective methods, contributions on behalf of Employees
may be calculated in accordance with any of the following alternative methods:
(a) The lesser of:
(i) 25% of the Employee's Includable Compensation plus $4,000,
(ii) The Exclusion Allowance, or
(b) The lesser of 25% of the Employee's Compensation or $30,000 (or 1/4 of the
dollar limitation in effect for defined benefit plans, if greater).
(c) In the Employee's year of separation from service, an amount equal to the
lesser of the Exclusion Allowance calculated by taking into account each year of
the period of years (but not more than ten) immediately preceding the date of
the Employee's separation from service, or $30,000 (or 1/4 of the dollar
limitation in effect
<PAGE>
for defined benefit plans, if greater).
Alternative (c) may be used only once. An election by an Employee to have any
one of the alternative methods in paragraphs (a), (b), or (c) above will
preclude an election to have any other of the alternative methods apply in any
future year. If alternative (b) is elected, contributions and benefits under the
Employer's qualified retirement plans must be combined with contributions to the
Custodial Account.
In addition to alternatives (a), (b) and (c) above, employees of certain church
organizations can elect to have other special limits apply. Under one of these
special limits these employees can use $10,000 as the limit on annual
contributions made on their behalf for a year. The lifetime maximum under this
method is $40,000. If a Church employee elects the $10,000/$40,000 limitation
described above, he or she cannot also elect to use election (c) above for one
year. In the alternative, if the Church employee does not have adjusted gross
income in excess of $17,000 for the year, he or she can annually elect a minimum
Exclusion Allowance equal to the lesser of $3,000 of his or her includable
compensation for the year. The Code requires that in order for an eligible
Employee to use any of the elective methods, his or her election must be
irrevocable and must be made in accordance with regulations under the Code.
VI. SPECIAL LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS
Notwithstanding the fact that a contribution falls within the limits of the
Exclusion Allowance or special elective contribution alternatives discussed
above, effective January 1, 1987, no more than $9,5000 in salary reduction
contributions may be contributed annually, and excluded from income, to a
Custodial Account. Furthermore, if an Employee also makes salary reduction
contributions under a qualified cash or deferred arrangement as defined in
Section 401(k) of the Code, or under a simplified employee pension as defined in
Section 408(k) of the Code, or under another 403(b) annuity contract or
custodial account, those contributions are all aggregated with the salary
reduction contributions under the Custodial Account for purposes of the $9,500
limit. The $9,500 limit is an overall cap on contributions and does not increase
the Employee's maximum contribution limit, if that is a lesser amount.
Employees of public educational institutions, hospitals, home
<PAGE>
health services, health and welfare service agencies or churches may be able to
make salary reduction contributions of more than $9,500 per year to their
Custodial Accounts if they have completed 15 years of service with that
institution. Under this exception, the maximum contribution is increased by the
lesser of a) $3,000; b) $15,000 reduced by any amounts in excess of $9,500 that
were contributed on behalf of the Employee in prior years pursuant to this
special rule; or c) the excess of (i) $5,000 multiplied by the Employee's number
of years of service with the Employer, over (ii) the amount of salary reduction
contributions made on the Employee's behalf for prior taxable years.
If an Employee contributes a greater amount to the Custodial Account than the
maximum amount described in the Section VI., the Employee may notify the
Custodian by March 1 following the year in which an excess amount is
contributed, of the amount of the excess (called an "Excess Deferral"). Upon
receiving such notice, the Custodian may distribute the amount of such Excess
Deferral (and the income thereon) by April 15 following the close of such year.
The amount of the Excess Deferral that is distributed is not includable in the
Employee's income and is not subject to the 10% additional tax on distributions
before age 59 1/2.
Contributions made pursuant to an Employee's one-time irrevocable election to
reduce salary, made at the time of initial eligibility to participate in the
Custodial Account, are not treated as salary reduction contributions for
purposes of the limitations described in this Section VI.
VII. COVERAGE UNDER MORE THAN ONE PLAN
If Contributions to the Custodial Account are based on the alternative method
set forth in Section V.(b) above, and the Employee is covered by a retirement
plan controlled, and maintained for him or her, by his or her employer (for
example, a state-wide plan for teachers), both the Employer's plan and the
Custodial Account must be considered to be one plan in order to determine
whether the limitations on contributions and benefits imposed by the Code will
be exceeded.
The First Investors Corporation Custodial Account is considered to be a Defined
Contribution Plan. If the other plan(s) under which the Employee is covered is
(are) also Defined Contribution Plans, the Annual Addition under all such plans
(including the Custodial Account) for any taxable year may not exceed the lesser
of 25%
<PAGE>
of the Employee's compensation or $30,000 (or, if greater, 1/4 of the
dollar limitation in effect for defined benefit plans).
The term "Annual Addition" means the sum for any year of (a) Employer
Contributions, (b) Employee Contributions and (c) forfeitures. All Contributions
to the Custodial Account are considered under the Code to be Employer
Contributions even if derived through a salary reduction arrangement. Moreover,
the Custodial Account does not provide for forfeitures since the Employee's
benefits vest immediately. However, these items must be taken into consideration
to the extent applicable to any other plans maintained by the Employer for the
Employee.
If the other plan(s) under which the Employee is covered is a Defined Benefit
Plan, then the sum of the projected annual benefit under the Defined Benefit
Plan and the Annual Additions under the Defined Contribution Plan (the Custodial
Account) may not exceed an additional overall limitation. This overall
limitation is determined, in general, by computing two factors:
(i) The "Defined Benefit Fraction," which is expressed as the projected annual
benefit under the Defined Benefit Plan as of the end of the year divided by the
lesser of (a) $90,000 (as adjusted for inflation) times 1.25, or (b) 100% of the
Employee's compensation for his or her three highest years times 1.4; and
(ii) The "Defined Contribution Fraction," which is expressed as the total Annual
Additions to the Defined Contribution Plan as of the end of the year divided by
the sum for all years of the employee's service of the lesser for each year of
(a) $30,000 (or if greater, 1/4 of the Defined Benefit limit in effect for the
year) times 1.25 or (b) 25% of the Employee's Compensation for the year or, if
applicable, the special limit for Church Employees discussed in Section V.
above.
The overall limitation is exceeded if the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction exceeds 1.00.
VIII. EXCESS CONTRIBUTIONS AND BENEFITS
The Code imposes penalties on the portion of contributions to the Custodial
Account which exceed the applicable Exclusion Allowance described above ("Excess
Contributions"). Excess Contributions to the Custodial Account are subject to a
6% federal excise tax until
<PAGE>
the excess is eliminated and also are includable in the gross income of the
Employee for federal income tax purposes in the year in which such Excess
Contribution is made. Further, if an Excess Contribution is made, the amount
thereof reduces the Employee's Exclusion Allowance.
Amounts contributed in excess of the $9,500 limit described in Section VI. are
not "Excess Contributions" subject to an excise tax. However, unless such
amounts are distributed as described in Section VI., the Excess Deferral is
includable in the Employee's gross income both in the year contributed, and
again when such amounts are distributed from the Employee's Custodial Account.
IX. DISTRIBUTIONS
Distributions from the Custodial Account are intended to provide a retirement
benefit for the Employee, and accordingly, will be paid after the Custodian has
received notification of the Employee's retirement at normal retirement age,
ordinarily age 65. The Employee's Custodial Account must begin to be distributed
by April 1 of the year following the year in which the Employee attains age 70
1/2 (whether or not the Employee has retired).
However, for an Employee who has reached age 70 1/2 before January 1, 1988 or
for an Employee covered under a governmental plan or a church plan within the
meaning of Section 401(a)(9)(C) of the Code, the required beginning date is
April 1 of the year following the later of the year in which the Employee
attains age 70 1/2 or the year in which the Employee retires.
Distributions from the Custodial Account made as a result of the death of the
Employee must be made over certain time periods as specified in the Code and
Internal Revenue Service regulations. The time period over which benefits must
be paid, because of an Employee's death, depends on the relationship of the
beneficiary to the Employee and whether benefits to the Employee had commenced
prior to his or her death.
Distributions on death will be made to the Employee's designated beneficiary.
In addition to retirement distributions, if the Employee encounters financial
hardship, becomes disabled, separates from the service of the Employer, or
attains age 59 1/2, distributions may be made from the Account. However,
effective January 1, 1989, if a distribution
<PAGE>
is made on account of financial hardship, only the Employee's salary reduction
contributions (and not the income thereon) may be distributed.
Any Eligible Rollover Distribution which is not transferred to an eligible
retirement plan shall be subject to mandatory 20% income tax withholding, in
addition to income taxes and (possibly) a ten percent (10%) early withdrawal
penalty. The Code imposes penalties if the Employee receives distributions from
the Custodial Account before the Employee attains age 59 1/2. A 10% additional
income tax is imposed on the amount of the distribution that is includable in
the Employee's gross income unless the distribution is due to the Employee's
disability, death, part of a series of substantially equal payments over the
Employee's life expectancy or the joint life expectancies of the Employee and
the Employee's designated beneficiary, made on account of the Employee's
separation from service after attainment of age 55, or in certain other limited
instances.
X. FEDERAL TAX TREATMENT
Contributions to the Custodial Account which do not exceed the Exclusion
Allowance and the special limitation on elective salary reduction contributions
are excludable from the gross income of the Employee. Dividends and capital
gains distributions on securities held in the Custodial Account are accumulated
tax-free until distribution of the Account. Distributions from the Custodial
Account are taxed to the Employee under Section 72 of the Code as ordinary
income in the year(s) during which such distributions are received. If all
contributions have been excluded from the Employee's taxable income, the
Employee's cost basis in the Custodial Account is zero and distributions
therefrom will be taxed as ordinary income as received. If any part of the
contributions were taxable to the Employee, which would be the case for example
if the Exclusion Allowance was exceeded, the aggregate amount of all such
taxable contributions comprises the Employee's cost basis. If such an Employee
takes distributions from the Custodial Account in installments, then all of the
installments will include a portion excludable from tax as a return of the
Employee's cost basis.
In the event of the death of an Employee prior to the full distribution of his
or her Custodial Account, the remainder is taxed as income to his or her
beneficiary as received. Like the Employee, however, the beneficiary may exclude
any remaining cost
<PAGE>
basis which the Employee had in the Custodial Account.
Under certain circumstances, a death benefit exclusion is available to the death
beneficiary of an Employee. In such cases, the beneficiaries of the Employee are
entitled to an exclusion of $5,000 (aggregate total for all beneficiaries) for
income tax purposes. If the deceased Employee was a participant in a qualified
trust or annuity plan of the Employer, as well as a participant in the Custodial
Account, the exclusion must be allocated between distributions for both sources.
Section 403(b)(7) was added to the Code by the Pension Reform Act of 1974. No
final regulations pertaining specifically to that section have as yet been
adopted by the Internal Revenue Service. If final regulations are adopted
requiring changes to the First Investors Corporation 403(b) Custodial Account
Agreement, it is the intention of First Investors Corporation to amend the
Agreement to comply with any such regulations.
It should be understood, in addition, that the foregoing discussion of federal
income tax consequences is not exhaustive. Employers desiring to establish the
Custodial Account to provide retirement benefits for Employees should consult
fully with a qualified tax advisor in order to ascertain whether, in light of
any existing retirement plans for their Employees, contributions or benefits
under all such Plans (including the Custodial Account if adopted) will exceed
permissible limits under the Code. Employers and their Employees desiring to
enter into a salary reduction arrangement to fund the Custodial Account should
determine that they are permitted to enter into the salary reduction agreement
and such Employees should carefully determine whether applicable contributions
and benefit limits will be exceeded due to contributions to the Custodial
Account.
XI. DEFINITIONS
(a) "Includable Compensation" means the amount of Compensation received by the
Employee from the Employer named in the Application which is includable in the
Employee's gross income for federal income tax purposes computed without regard
to Section 911 of the Code. Contributions to the Account or to any annuity
contract under Section 403(b) of the Code which are excludable from gross income
are not considered to be "Includable Compensation" for purposes of calculating
the Exclusion Allowance. Section 911 of the Code in certain circumstances
permits exclusion from gross
<PAGE>
income of certain items of income earned outside the United States. However,
where Section 911 permits exclusion from gross income of certain earned income,
these amounts must be included in "Includable Compensation" to determine that
amount of the Exclusion Allowance during any taxable year of the Employee.
(b) "Years of Service." Section 403(b)(4) of the Code requires that in
determining the number of years of service in calculating the "Exclusion
Allowance," there shall be included one year for each full year during which the
Employee was a full-time Employee of the Employer named in the Application. In
determining what constitutes a full year of service, the Employer's annual work
period, and not the Employee's taxable year, is the standard of measurement. For
example, in determining whether a professor is employed full-time, the number of
months of the school academic year is the standard of measurement. If the
Employee has been in the Employer's employ for a period of time shorter than the
Employer's annual work period, the fraction of the year used to calculate the
Exclusion Allowance equals the fraction in which the numerator is equal to the
number of weeks for such year of full-time employment over a denominator which
equals the employer's annual work period. For example, if an Employer's annual
work period is 30 weeks and the Employee has been employed full-time by that
Employer for 15 weeks, for purposes of calculating the years of service factor
of the Exclusion Allowance for that year the Employee is considered, under the
Regulations, to have completed one-half year of service.
In determining whether an Employee is employed full-time, the amount of work
which he or she is required to perform must be compared with the amount of work
which is normally required by Employees holding the same position with the same
Employer and who generally derive the major portion of their personal service
income from such position.
Special rules apply for calculating "Years of Service" for Employees who have
been "part-time" Employees for an entire year or for part of a year. These rules
appear in Section 1.403(b)-1(f)(5) of the Regulations under the Code and should
be consulted with respect to any part-time Employees expected to be covered by
the Custodial Account.
For purposes of calculating the Exclusion Allowance, if the Employee has less
than one year of service, such fraction of a year will be considered one year.
<PAGE>
(c) "Compensation" for purpose of the limitations described in Section IV.
and V. above is defined in Sections 414(s) and 415(c)(3) of the Code, and as
applicable to the Custodial Account means the compensation of the Employee from
the Employer for the year in question. "Compensation" does not include amounts
contributed to the Custodial Account which are currently excludable from gross
income.
WHAT IS A SIMPLIFIED EMPLOYEE PENSION (SEP)?
A Simplified Employee Pension ("SEP") is a retirement plan established by an
employer for its eligible employees. Employees who have not attained age 21 or
who have not worked for the employer in at least three of the immediately
preceding five years may be excluded from participation. Form 5305-SEP is
completed by the employer, and indicates the eligibility requirements for SEP
participation.
The employer takes a deduction on its tax return for the amount contributed.
Employees are not taxed on SEP contributions when they are made. SEP earnings
grow tax-deferred, until withdrawn.
A SEP may be adopted by an employer that satisfies the following conditions:
a. The employer has never maintained a defined benefit plan.
b. The employer currently maintains no other qualified employer retirement
plan.
c. The employer is not part of a group of entities under common control, or
part of an affiliated service group, as such terms are defined by the Internal
Revenue Code, unless all eligible employees of such related business entities
participate in the SEP.
d. The employer does not utilize any leased employees, as defined by the
Internal Revenue Code.
Certain other requirements may apply.
Establishing a SEP is easy. The employer completes Form 5305-SEP, and remits the
completed and signed form, a check, and Schedule A (which shows each
participant's allocation of the employer's total contribution) to Administrative
Data Management Corp. SEP-IRA Applications (on page 10) are completed by the
eligible employees and are filed along with the Form 5305-SEP, a check and
Schedule A. The employer is required to provide participants with a copy of the
filed Form 5305-SEP, including the instructions and attached questions and
answers.
A separate account is maintained for each SEP participant.
SEP contributions are only made by the employer and do not reduce the employee's
salary or other compensation. The employer decides whether to make a SEP
contribution each year. The SEP contribution must be made as a uniform
percentage of all eligible employees' compensation. No participant may have an
amount allocated to his or her SEP account in any year which exceeds the lesser
of $30,000.00 or 15% of the participant's compensation. In the event that a
SARSEP is also adopted, between the salary reduction contributions made to the
SARSEP and SEP contributions made by the
<PAGE>
employer, the same overall limitation (the lesser of $30,000.00 or 15% of
compensation per participant) applies to the total SEP and SARSEP contribution
allocation each year for each SEP participant. "Compensation, for SEP
contribution purposes, may not exceed $150,000 (for 1994).
Once a SEP contribution is made for the employee, the individual is completely
vested in the contribution and the SEP account then operates in the same manner
as an IRA. As such, the employee can withdraw SEP monies at any time and
consistent with IRA rules, a 10% penalty tax, in addition to ordinary income
taxes, can apply if a premature withdrawal is taken. Please refer to the IRA
Custodial Agreement and Disclosure Statement for the rules on early
distributions and IRA distribution requirements in general.
The SEP is a beneficial plan for both the employer and its employees. It
combines the flexibility and discretion found in profit sharing plans, with the
control and easy administration applicable to Individual Retirement Accounts.
The above summary is meant to highlight and explain the major characteristics of
a SEP, and is not meant to be exhaustive. An employer should consult with its
own tax advisors before adopting a SEP. Please read Form 5305-SEP, its
instructions, questions and answers for more complete details regarding your
First Investors SEP.
WHAT IS A SALARY REDUCTION SEP (SARSEP)?
A SARSEP, or salary reduction SEP, is a SEP under which an employee can elect to
defer a portion of his or her salary into the SARSEP plan. Employees who have
not attained age 21 or who have not worked for the employer in at least three of
the immediately preceding five years may be excluded from participation. Form
5305A-SEP is completed by the employer, and indicates the eligibility
requirements for SARSEP participation. No current income tax is imposed on the
salary reduction contribution, and the earnings within the SARSEP accumulate on
a tax-deferred basis until withdrawn.
A SARSEP may be adopted by an employer that satisfies the following conditions:
a. The employer had 25 or fewer employees in the immediately preceding year
who were eligible to participate.
b. The employer has never maintained a defined benefit plan.
c. The employer currently maintains no other qualified employer retirement
plan.
d. At least 50% of the employer's eligible employees elect to have amounts
contributed from their salaries into the SARSEP.
<PAGE>
e. The employer has at least one employee who is not a "Highly Compensated
Employee" as such term is defined by the Internal Revenue Code.
f. The employer is not part of a group of entities under common control, or
part of an affiliated service group, as such terms are defined by the Internal
Revenue Code, unless all eligible employees of such related business entities
are eligible to participate in the SARSEP and no more than 25 employees in the
aggregate are eligible to participate.
g. The employer is not a state or local government or a tax-exempt
organization.
Certain other requirements may apply.
Pursuant to a salary reduction agreement between the employer and employee,
employees elect to contribute a portion of their salaries into the plan. The
maximum annual salary reduction contribution for each employee is $9,240.00 (for
1994), or if less, 15% of the employee's compensation. The employer may be
required to make "top-heavy" contributions to the SARSEP. This is discussed
later in this summary.
Similar to a SEP, under a SARSEP the employer completes Form 5305A-SEP, and
files it, along with the total contribution and Schedule B (which shows each
participant's contribution), with Administrative Data Management Corp. Each
eligible employee completes a SARSEP-IRA Application, which should also be filed
with Administrative Data Management Corp. Similar to the SEP, individual
SARSEP-IRA accounts are maintained for all SARSEP participants. The employer is
required to provide participants with a copy of the filed Form 5305A-SEP,
including the instructions and attached questions and answers.
A SARSEP is similar to a 401(k) plan that the benefits are primarily funded by
salary reduction, pre-tax contributions made by the participants. Similar to
401(k) plans, there is a discrimination test for SARSEP contributions, which can
limit the salary reduction deferrals made by "highly compensated employees", and
which is described in Form 5305A-SEP. SARSEP's which satisfy the discrimination
test are easy to administer, and there are no Form 5500 reporting requirements.
When a "key employee", as such term is defined by the Internal Revenue Code,
makes a salary deferral contribution into the SARSEP, the SARSEP is deemed to be
"top-heavy". Generally, this requires that the employer make a 3% (or, if less,
the highest percentage deferral made by a key employee) contribution for all
non-key employees who are eligible to participate in the SARSEP.
You will find the SARSEP to be a vehicle under which employees can save for
their retirement, while benefiting from the reduction in their taxes (because
their contributions reduce their taxable
<PAGE>
salaries), as well as the tax-deferred growth of their SARSEP accounts. The
SARSEP is unique, in that it allows employees to fund (to a large degree) their
own retirement benefits, control, (and vary, if desired) the amounts
contributed, and have access to their SARSEP account.
The above summary is meant to highlight and explain the major characteristics of
a SARSEP, and is not meant to be exhaustive. An employer should consult with its
own tax advisors before adopting a SARSEP. Please read Form 5305A-SEP, its
instructions, and attached questions and answers for more complete details
regarding your First Investors SARSEP.
DISCLOSURE STATEMENT INDIVIDUAL RETIREMENT ACCOUNT
1. INTRODUCTION
This Disclosure Statement is distributed to you in accordance with Internal
Revenue Service regulations and is intended to provide you with a concise
explanation of the rules applicable to your Individual Retirement Account (IRA).
WE URGE YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY PRIOR TO ESTABLISHING AN
IRA. Due to the unfavorable tax consequences which may result from the improper
establishment of an IRA, you may wish to confer with your attorney or other
qualified tax advisor if you would like specific advice regarding your IRA. In
addition, further information can be obtained from any district office of the
Internal Revenue Service. The Tax Reform Act of 1986 (TRA) enacted many changes
to the rules governing IRAs. This Disclosure Statement contains a general
explanation of the TRA changes, which are generally effective for tax years
beginning after 1986. Because the Internal Revenue Service has not issued final
regulations with respect to some of the TRA changes or with respect to certain
other statutory provision, First Investors Corporation reserves the right to
amend the IRA governing instruments and this Disclosure Statement to comply with
any such subsequently issued regulations or applicable laws. The following is a
discussion of the statutory requirements and tax rules governing IRAs.
Additional information can be found in I.R.S. Publication 590, "Individual
Retirement Arrangements".
2. REVOCATION PROCEDURE
If your IRA is established on the date you receive this Disclosure Statement, or
within seven (7) days thereafter, you may revoke your IRA, for any reason and
without penalty, within seven (7) days after it is established. If your IRA is
established more than seven (7) days after the date you receive this Disclosure
Statement, it may not be revoked. If you should choose to revoke your IRA, the
entire amount of your contribution will be refunded without adjustment for
administrative expenses or any other amount. In order to revoke your IRA, you
must mail or deliver a written notice of revocation to:
<PAGE>
First Investors
c/o Administrative Data Management Corp.
Attn: ADM Services Department
581 Main Street
Woodbridge, New Jersey 07095-1198
If mailed, the revocation notice shall be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at
1-800-423-4026 if you have any questions with respect to this procedure.
Generally, your initial contribution is invested in fund shares on the date of
receipt; however, in the case of a large contribution, Administrative Data
Management Corp. reserves the right not to invest such contribution in fund
shares until the 7th day after it is received.
3. IRA REQUIREMENTS
An Individual Retirement Account is a trust created or organized in the United
States for the exclusive benefit of an individual or his or her beneficiaries.
The written instrument creating the trust must satisfy the following
requirements:
1. Except in the case of a rollover contribution and trustee to trustee
transfer (explained below), contributions must be in cash and may not exceed
$2,000 on behalf of any individual;
2. The trustee must be a bank or such other person as approved by the
Secretary of the Treasury;
3. No part of the trust funds may be invested in life insurance contracts;
4. The interest of an individual in an IRA must be nonforfeitable;
5. The assets of the trust may not be commingled with other property except
in a common trust fund or common investment fund; and
6. IRAs must be distributed in accordance with certain rules (explained
below).
Your First Investors IRA is a custodial account which is treated as a trust for
these purposes under the Federal tax laws.
4. ELIGIBILITY
You are eligible to establish an IRA for any year in which you work and receive
compensation for such work, provided that you have not attained age 70 1/2 in
the year in question. If eligible, both a
<PAGE>
husband and wife may each have their own separate IRA. If either spouse is
ineligible to establish an IRA, the other spouse may be permitted to establish a
Spousal IRA.
"Compensation" includes wages, salaries, professional fees, and other amounts
received for personal services actually rendered, including such items as
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses.
Compensation also includes earned income of a self-employed person and any
amount includable in an individual's income as alimony or separate maintenance
payments. Compensation does not include amounts derived from or received as
earnings or profits from property, such as interest, dividends and rent, or any
amount not includable in gross income.
You may have an IRA whether or not you are a participant in any other retirement
plan. However, if you or your spouse are an active participant in another
retirement plan the amount of your annual contribution which is tax deductible
may be reduced. Please refer to Section 5 for assistance in determining the tax
deductible amount of your annual contribution.
5. CONTRIBUTIONS
A. Deductible Contributions
You may make an annual contribution to your IRA up to a maximum of $2,000 (or
$2,250 for a Spousal IRA) or 100% of your compensation, whichever is less. If
neither you nor your spouse is an "active participant" in an employer maintained
retirement plan at any time during the year, the entire amount of your
contribution will be tax deductible. If either you or your spouse is an active
participant in an employer maintained retirement plan, but you have adjusted
gross income (AGI) below a certain level (explained below), your entire
contribution will be tax deductible. However, if either you or your spouse is an
active participant and your AGI is above the applicable dollar level, the amount
of your contribution which is tax deductible may be reduced or eliminated.
An exception applies in the case of a husband and wife who lived apart at all
times during the year and filed separate tax returns for the year: They are
treated as not married for the year for purposes of the active participation
rules.
In order to be deductible for a taxable year, annual contributions must be made
not later than the due date (without regard to extensions) of your tax return
for the year for which the deduction is claimed. Annual contributions may be
made in one or more payments, by check or money order payable to First Investors
Corporation. The minimum payment which may be made is the minimum amount
required for investment in the fund shares which you select for investment of
your contributions. The money earned on your investment will be automatically
reinvested, and is not taxable to
<PAGE>
you until the year in which you actually receive it.
You are an "active participant" for a year if you are covered by any of the
following retirement plans:
1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");
2. An annuity plan described in Section 403(a) of the Code;
3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);
4. An annuity contract or custodial account described in Section 403(b) of
the Code.
5. A simplified employee pension (SEP) described in Section 408(k) of the
Code;
6. A trust described in Section 501(c)(18) of the Code.
You are covered by a retirement plan for a year if your employer or union has a
retirement plan under which money is added to your account or you are eligible
to earn retirement credits. you are an active participant for a year even if you
are not yet vested in your retirement benefit. Also, if you make required
contributions or voluntary employee contributions to a retirement plan, you are
an active participant. In certain plans, you may be an active participant even
if you were only employed for part of the year. Starting with the 1987 tax year,
your Form W-2 should indicate your active participant status.
You are not considered an active participant if you are covered by a plan only
because of your service as (1) an Armed Forces Reservist, for less than 90 days
of active service; or (2) a volunteer fire fighter covered for fire fighting
service by a government plan, and your accrued benefit under such plan as of the
beginning of the year is not more than an annuity of $1,800 per year payable at
age 65. Of course, if you are covered by any other plan, these exceptions do not
apply.
If you would like specific advice as to whether you are an active participant in
a retirement plan, you should consult with your attorney or other qualified tax
advisor.
If you or your spouse is an active participant, you must calculate your adjusted
gross income (AGI) for the year (if you and your spouse file a joint tax return,
you must use your combined AGI) to determine whether your IRA contribution will
be deductible.
Your tax return will show you how to calculate your AGI for this purpose. If
your AGI is at or below a certain level, called the
<PAGE>
"Threshold Level," you are treated as if you were not an active participant and
you can make a deductible contribution under the same rules as a person who is
not an active participant.
If you are single (or married but treated as single under the exception
described above), your AGI Threshold is $25,000. If you are married and file a
joint tax return the Threshold Level is $40,000. If you are married but file a
separate tax return, the Threshold Level is $0.
If your AGI is less than $10,000 above your Threshold Level, you will still be
able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level is called your Excess AGI.
The maximum allowable deduction is $2,000 (or $2,250 for a Spousal IRA). you may
calculate your deduction limit by using the following formula:
$10,000 - Excess AGI x Maximum Allowable = Deduction
- -------------------- Deduction Limit
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in 0). For example, if the result is $1,525, you must round it
up to $1,530. If the final result is below $200 but over 0, your deduction limit
is $200. Your deduction limit cannot, in any event, exceed 100% of your
compensation.
The following examples illustrate the above formula.
Example One: Mr. Smith, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. He has contributed $2,000 to
his IRA for the current year. Mr. Smith wishes to calculate the deductible
portion of his IRA contribution. He must first determine the amount of his
Excess AGI. Excess AGI is equal to AGI minus the Threshold Level. Since Mr.
Smith is a single individual his Threshold Level is $25,000. Thus, his Excess
AGI is $3,000 ($28,000-$25,000). Mr. Smith will determine his deduction limit as
follows:
$10,000 - $3,000 x $2,000 = $1,400
- ----------------
$10,000
Example Two: Mr. and Mrs. Jones are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Mr. Jones is not covered by any other
retirement plan. Mrs. Jones is an active participant in her employer's
retirement plan. Mr. and Mrs. Jones have each contributed $2,000 to their
separate IRAs. The maximum allowable deduction for each spouse is $2,000. Mr.
and Mrs. Jones wish to calculate the deductible portion of their IRA
contributions. Mr. and Mrs. Jones must first determine the amount of their
Excess AGI. Since they are a married couple filing a joint return the Threshold
Level is $40,000. Thus, their Excess AGI is $5,000 ($45,000-$40,000). Mr. and
Mrs. Jones will each determine their individual deduction limit as follows:
<PAGE>
$10,000 - $5,000 x $2,000 = $1,000
- ----------------
$10,000
Mr. and Mrs. Jones will therefore be able to claim a total deduction of $2,000
on their joint income tax return.
B. Non-Deductible Contributions
Even if your deduction is less than $2,000 ($2,250 for a Spousal IRA), you may
still contribute to an IRA up to the lesser of 100% of your compensation or
$2,000 ($2,250 for a Spousal IRA). The amount of your contribution which is not
deductible will be treated as a non-deductible contribution to your IRA. You may
also choose to treat a contribution as non-deductible even if you could have
deducted part of all of the contribution. Interest or other earnings on your IRA
contribution, whether from deductible or non-deductible contributions, will not
be taxed until distributed to you from the IRA.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your individual income tax return, you must then determine how much of your
contribution is deductible. If you determine that all or a portion of your
contribution is non-deductible, you must report such amount to the IRS on Form
8606 as part of your tax return for the year. If you fail to file Form 8606, you
may be subject to a penalty of $50. If you overstate the amount of the
non-deductible contribution, you may be subject to a penalty of $100.
C. Spousal IRA Contributions
If you and your spouse file a joint income tax return and your spouse either has
no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make IRA contributions on behalf of yourself and your spouse
for a given tax year, the aggregate amount of the contributions to both your IRA
and your spouse's IRA may not exceed the lesser of $2,250 or the amount of your
compensation for such year. The contribution does not have to be split equally
between the IRAs belonging to you and your spouse. However, the total
contributions to either of your IRAs may not exceed $2,000.
If you are unable to make contributions to your IRA because you have attained
age 70 1/2, you may nevertheless continue to make contributions to your
non-working spouse's IRA until the year in which your spouse reaches age 70 1/2.
D. Excess Contributions
If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever, is applicable, such amount is
<PAGE>
an "excess contribution." A non-deductible 6% excise tax is imposed upon such
excess contribution for the year in which it is made and also for each following
year until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the date for filing your federal income tax
return for the year for which the excess contribution is made. The earnings
attributable to the excess contribution must also be withdrawn and must be
included in your gross income in the year for which the excess contribution was
made. A timely withdrawal of the excess contributions will permit you to avoid
not only the 6% excise tax but also the 10% penalty tax on premature
distributions. A withdrawal of an excess contribution after the tax return
filing date will avoid the 10% penalty tax on premature distributions, provided
that the total contribution for the year did not exceed $2,250 and no deduction
was allowed for the excess contribution.
As an alternative to withdrawing such excess contribution, you may eliminate
such excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excess tax
until the excess contribution is completely eliminated.
E. SEP-IRA Contributions
If your IRA is part of a Simplified Employee Pension (SEP-IRA) established by
your employer (or by you if you are self-employed), the maximum amount which may
be contributed on your behalf may be greater than the general maximum IRA
limitations on contributions, described above.
The maximum amount which may be contributed on your behalf to a SEP-IRA is the
lesser of (i) 15% of your compensation for the year (if you are self-employed,
your "earned income" after taking into account the SEP-IRA contribution and tax
deduction allowed under Internal Revenue Code Section 164(f) or (ii) $30,000. In
addition, your employer may establish a type of SEP-IRA (a "SARSEP") which would
allow you to make elective contributions to your IRA of up to $9,240 per year,
subject to the same 15% and $30,000 limits. (The elective contribution limit is
adjusted by the Internal Revenue Service.)
Amounts contributed to a SEP-IRA within the above limits are excluded from your
income for Federal income tax purposes until such amounts are distributed to
you. Amounts distributed to you from a SEP-IRA are taxed in the same manner as
distributions from other IRAs.
If you are a participant in a SEP-IRA, your employer is required to give you a
copy of the SEP-IRA documents, including certain explanatory materials
concerning the Federal income tax rules for
<PAGE>
SEP-IRAs, and inform you each year of the amounts (if any) contributed on your
behalf.
6. ROLLOVER CONTRIBUTIONS
A rollover is a tax free transfer of cash or other assets from one retirement
program to another. There are two types of rollover contributions to an IRA. The
first type involves the transfer from one IRA to another IRA. The second type
involves the transfer of assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan to an IRA. A rollover contribution
is neither includable in your income nor deductible. Unlike annual
contributions, rollover contributions are not subject to the yearly $2,000 (or
$2,250 in the case of the Spousal IRA) or 100% of compensation limitation.
A. IRA to IRA Rollover and Trustee to Trustee Transfer
In order to qualify for tax-free treatment you must make a rollover contribution
from one IRA to another IRA within 60 days after you receive the distribution
from the first IRA. In addition, if the assets distributed from your IRA are
property other than cash, the identical property must be contributed to your new
IRA in order to qualify as a rollover contribution. 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. Amounts not rolled over may also be
subject to the 10% penalty tax on premature distributions.
Rollovers between IRAs are allowed only once a year. The one year period begins
on the date that you receive the IRA distribution and not on the date it is
rolled over into another IRA. A rollover from one IRA to another should not be
confused with a transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee (trustee to trustee transfer). This is not
considered a rollover and, consequently, is not affected by the limitation on
rollovers to once a year.
In order to qualify for tax-free treatment, it is not necessary to rollover the
entire amount of the distribution which you receive. It is permissible for you
to rollover a portion of the distribution and to keep the remainder. However,
the amount you retain will be taxed in the year of receipt as ordinary income.
In addition, the amount retained may be subject to the 10% tax on premature
distributions.
B. Retirement Plan to IRA Rollover
You may also be eligible for tax-free rollover treatment when you receive a
distribution from a tax-sheltered annuity or custodial account or from your
employer's qualified retirement plan. For retirement plan distributions paid to
you before January 1, 1993, in order to qualify for tax-free rollover treatment
a distribution from a qualified retirement plan must constitute either a
<PAGE>
"qualified total distribution" or "partial distribution".
A "qualified total distribution" means one or more distributions:
(i) which are paid to you within a single taxable year on account of the
termination of your employer's qualified plan, or in the case of a profit
sharing or stock bonus plan, a complete discontinuance of contributions;
(ii) which constitute a "lump sum distribution" within the meaning of the
Internal Revenue Code; or
(iii) which constitute a distribution of your accumulated deductible employee
contributions.
In order for a qualified total distribution to be eligible for tax-free rollover
treatment, such distribution must be transferred to an IRA within 60 days of the
date you receive it. In addition, if such distribution consists of property
other than money, the identical property must be transferred to your IRA in
order to qualify as a rollover contribution. However, you are permitted to sell
the property and transfer the proceeds of the sale to the IRA within 60 days of
receipt of the distribution. In order to be eligible for tax-free treatment, it
is not necessary to roll over the entire qualified total distribution. In fact,
you are not permitted to roll over any after-tax employee contributions which
you have made to your employer's qualified retirement plan. However, the earning
attributable to such after-tax contributions may be rolled over. Any portion of
a qualified total distribution which you retain, except your own after-tax
contributions, will be subject to current income tax.
If you receive a qualified total distribution from your employer's plan and roll
over part or all of it into an IRA, you may later roll over those asset into a
new employer's plan (if the plan permits you to do so). Under such
circumstances, your IRA serves as a holding account or conduit for those assets.
However, you may roll over those assets into another qualified employer's plan
only if they consist of funds received from the first employer's plan and
earnings on those funds, and you did not mix other IRA contributions or funds
from other sources with them.
If you receive a "qualified total distribution," within the meaning of the
Internal Revenue Code, from a Section 403(b) annuity or custodial account you
may also make a tax-free rollover to an IRA if such distribution is transferred
to an IRA within 60 days after you receive it.
The term "partial distribution" means a distribution during a single tax year
which represents at least 50% of the balance due you from a qualified retirement
plan or tax-sheltered annuity or custodial account and which is paid to you:
(i) Because you separated from service with the employer;
<PAGE>
(ii) Because you became disabled while working for the employer; or
(iii) Because of the death of your spouse while he or she was covered under the
plan and you are named as the beneficiary.
You may elect to roll over tax-free, all or part of a partial distribution from
a qualified plan or a tax-sheltered annuity or custodial account into an IRA.
Such rollover must occur within 60 days of the receipt of such partial
distribution in order to qualify for tax-free treatment. A rollover of a partial
distribution should not be confused with partial rollovers of a total
distribution from an employer's qualified plan. If you roll over a partial
distribution from a qualified plan, you will lose the ability to use special
income averaging on subsequent distributions from the qualified plan.
In order to properly roll over a qualified total distribution or partial
distribution you must make a rollover election, by designating in writing, to
the trustee of the IRA that such amount is to be treated as a rollover
contribution.
If you receive a distribution from your spouse's employer's retirement plan
pursuant to a "qualified domestic relations order", you may be eligible to make
a tax-free rollover to an IRA. In order to obtain tax-free treatment, the
balance to your credit under the retirement plan must be paid or distributed to
you within one taxable year. You may rollover any portion of the cash or
property received in such distribution to an IRA. In the case of a distribution
of property other than cash, the property received must be rolled over.
For retirement plan distributions payable to you on or after January 1, 1993,
any eligible rollover distribution, as defined by the Unemployment Compensation
Amendment of 1992, may be rolled over into an IRA or other eligible retirement
plan. Your employer is required to provide you with a notification after you
terminate employment which explains the new rollover rules.
First Investors Corporation (including its affiliates), Administrative Data
Management Corp. and First Financial Savings Bank, S.L.A. takes no
responsibility, nor assumes any liability for any rollover made by you which
does not qualify as a tax-free rollover under the Internal Revenue Code. Since
penalty taxes may be imposed (in addition to other possible negative tax
consequences) when invalid rollovers are made to an IRA, please consult with
your tax advisor to ensure that any rollover is made in the appropriate manner.
7. DISTRIBUTIONS
For taxable years beginning after 1984, the IRA distribution rules are similar
to the rules for distributions from qualified retirement plans, pursuant to
regulations to be issued by the
<PAGE>
Secretary of the Treasury. Proposed regulations were issued on July 24, 1987
relating to required distributions from IRAs. This Disclosure Statement does not
discuss the proposed regulations. If you would like specific advice regarding
the proposed regulations you should confer with your attorney or other qualified
tax advisor.
Your IRA is intended to provide a source of income to you after attainment of
age 59 1/2 or if you become disabled. Distributions other than amounts rolled
over into another IRA or qualified plan are taxed as ordinary income in the year
receive by you. With certain exceptions, distributions which occur prior to age
59 1/2 will be subject to a 10% additional tax on premature distributions.
Please refer to Section 8 for a discussion of the distributions occurring prior
to age 59 1/2 which are not subject to the 10% tax.
While distributions from your IRA may commence without penalty for early
withdrawal at any time after you attain age 59 1/2, distributions must commence
on or before the first day of April of the year following the year in which you
attain age 70 1/2. Distributions must be paid to you in accordance with one of
the following methods:
(i) A single lump sum payment; or
(ii) Substantially equal monthly, quarterly, semi-annual, or annual payments
over a period certain not extending beyond your life expectancy or the joint and
last survivor expectancy of you and your designated beneficiary.
Other distribution methods may be available.
Notwithstanding that distributions may have commenced pursuant to option (ii)
above, you may receive a distribution in the balance in your IRA at any time.
Distributions also must meet certain minimum distribution requirements. Either
the entire interest in your IRA must be distributed before April 1 following the
year you attain age 70 1/2 or payments must be made over a period no greater
than your life expectancy or over the life expectancy of you and your designated
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 50% tax may be waived by the Internal Revenue Service.
At the time that you establish your IRA you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right
prior to the complete distribution of your IRA to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate shall
be treated as
<PAGE>
your designated beneficiary. If you should die after the distribution of your
IRA has commenced, the remaining portion of your IRA must continue to be
distributed as least as rapidly as under the method of distribution being used
prior to your death. If you should die before the distribution of your IRA has
commenced, your entire interest in your IRA must be distributed in accordance
with one of the following provisions:
(i) The entire balance of your IRA is distributed within five (5) years after
your death;
(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments over the
life expectancy of such beneficiary commencing no later than one (1) year after
your death;
(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive substantially equal periodic payments over his or her life
expectancy, commencing at any date prior to the date on which you would have
attained age 70 1/2;
(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his or her own IRA and receive distributions under
the general distribution rules discussed above. In addition to the distributions
described above, you may also receive a distribution from your IRA for the
purpose of transferring the assets into another individual retirement account,
individual retirement annuity, or, when eligible, to a qualified retirement
plan. A rollover distribution is not taxable to you provided that it is properly
redeposited within 60 days of receipt. Furthermore, any required distributions
may not be rolled over. Please refer to Section 6 for a discussion of the
requirements which must be satisfied in order to qualify for tax-free rollover
treatment.
8. TAX TREATMENT OF DISTRIBUTION
A. Income Tax
As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA, the
portion of your IRA distribution consisting of non-deductible IRA contributions,
each distribution from your IRA will consist of a nontaxable portion (return of
non-deductible contributions) and a taxable portion (return of deductible
contributions, if any, and earnings). Thus you generally may not take a
distribution which is entirely tax free. The following formula is used to
determine the nontaxable portion of your distributions for a tax year:
<PAGE>
Non-deductible
Contributions x Total Distribution = Nontaxable
- -------------- (for the year) Distributions
Year end IRA (for the year)
Balance
+ total distribution
(for the year)
The following illustrates how you will determine the nontaxable portion of your
distributions for a taxable year.
Example: Ms. Gray has made the following contributions to her IRA:
YEAR DEDUCTIBLE NON-DEDUCTIBLE
- ---- ---------- --------------
1984 $2,000 $0
1985 $2,000 $0
1986 $2,000 $0
1987 $1,000 $1,000
1988 $0 $2,000
------ ------
$7,000 $3,000
During 1989, Ms. Gray receives a $1,000 distribution from her IRA. On December
31, 1989 the total value of Ms. Gray's IRA is $14,000. The nontaxable portion of
the distribution she received during 1989 is determined as follows:
$3,000 x $1,000 =$200
- ---------------
$14,000 + 1,000
To determine your year end IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as simplified employee
pension (SEP) IRAs, and rollover IRAs. You also add back the distributions taken
during the year.
A single lump sum distribution from your IRA is not entitled to ten year
averaging, five year averaging or capital gains treatment accorded lump sum
distributions from a qualified plan.
B. Early Withdrawal Tax
In general, distributions from your IRA which occur prior to you attaining age
59 1/2 will be subject to adverse tax consequences. Not only will such
distributions be fully taxable to you as ordinary income, such distributions
will also be subject to a 10% additional tax.
In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death,
disability and divorce will be exempt from the 10% additional tax. You are
considered disabled if you are "unable to engage in any substantial gainful
activity because of a medically determinable physical or mental impairment which
can be expected to result in death or to be of long, continued, and indefinite
duration." In addition, distributions before age 59 1/2 are not subject to the
10% tax if made in the form of substantially equal
<PAGE>
periodic payments and are made over your life expectancy or the joint life
expectancies of you and your designated beneficiary.
C. Excess Distributions Excise Tax
A 15% excise tax is imposed on annual distributions from IRAs and other
tax-favored retirement arrangements to the extent that such distributions in the
aggregate exceed $150,000 during any year. For certain qualifying "lump-sum
distributions" the threshold amount, above which the excise tax is applied, is 5
times the applicable threshold for annual distributions. A similar tax is
imposed upon your estate if you die with "excess accumulations". There are
special rules which may apply if you had substantial (greater than $562,500)
total accrued retirement benefits as of August 1, 1986 and you made a special
election ("grandfather" election) by the due date of your 1988 Federal income
tax return. You should discuss these matters with your tax advisor.
D. Gift Tax
Your designation of a beneficiary for your IRA will not be treated as a gift and
will not subject you to Federal gift taxes.
E. Estate Tax
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.
9. PROHIBITED TRANSACTIONS
You or your beneficiary may not participate in any transaction with your IRA
which is prohibited by law. Such "prohibited transactions" include but are not
limited to:
(i) the sale, exchange, or lending of any property;
(ii) lending of money or other extension of credit;
(iii) furnishing of goods, services, or facilities;
(iv) the use of income or assets of the IRA by you or your beneficiary; and
(v) the use of your IRA as security for a loan.
If such transactions are engaged in, your IRA will be disqualified and will lose
its tax-exempt status. Under such circumstances, your IRA will be considered to
have been distributed to you and will be subject to the income and additional
taxes discussed above.
10. REPORTING REQUIREMENTS
If a transaction has occurred upon which a special penalty tax is imposed, such
as an excess contribution, a premature distribution
<PAGE>
or a failure to make a timely distribution, you are required to file Form 5329
with your annual income tax return for such year. Form 5329 need not be filed if
the only activity for the year is the making of contributions or the
distribution of permissible benefits.
11. IRS APPROVAL
This IRA is a model IRA which follows the approved document considered by the
Internal Revenue Service to meet the applicable requirements of the Internal
Revenue Code. Therefore, the Internal Revenue Service will not issue a formal
determination as to the qualified status of your IRA. Further information can be
obtained from any office of the Internal Revenue Service.
Please be aware that the Internal Revenue Service's approval is a determination
only as to the form of the IRA and does not represent a determination as to the
merits of the IRA.
12. IRA BALANCE
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon the market values of the securities in the
mutual fund investment portfolio, which are subject to fluctuations; therefore,
growth in the value of your IRA cannot be projected or guaranteed. Dividends
from net investment income and capital gains distributions paid by the mutual
funds selected will be reinvested in fund shares at the applicable reinvestment
price as of the respective reinvestment dates and such additional shares will be
credited to your IRA.
13. FEES, CHARGES and COMMISSIONS
A. IRA Custodian Fees
The Custodian of your IRA charges $7.00 for each distribution other than
periodic cash payments; and $1.00 for each periodic cash payment. These fees are
applicable regardless of the manner in which your IRA is funded. The Custodian
reserves the right to waive any of its fees at any time and to revise its fee
schedule upon written notice to the IRA holder.
B. Mutual Fund Commissions
If you fund your IRA by the direct purchase of Class A mutual fund shares, a
maximum sales commission of 6.25% of the offering price may be charged. Class A
commissions range from 6.25% to 1.5% of the fund's offering price. Reduced Class
A share commissions apply for purchases of more than $25,000 under the fund's
rights of Accumulation Privilege or a Letter of Intent. If you fund your IRA by
the direct purchase of Class B shares, purchases will be transacted at the
fund's net asset value and a contingent deferred
<PAGE>
sales charge may be imposed upon redemption of such shares.
CUSTODIAL AGREEMENT
INDIVIDUAL RETIREMENT ACCOUNT
FORM 5305-A
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), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)). 2. No part of the custodial funds may be invested in
collectible (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
<PAGE>
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
<PAGE>
year of the Depositor's death. If, however, the beneficiary is the Depositor's
surviving spouse, then this distribution is not required to begin before
December 31 of the year in which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the requirements
of section 408(b)(3) and its related regulations has irrevocably commenced,
distributions are treated as having begun on the Depositor's required beginning
date, even though payments may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been distributed
and if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
5. In the case of 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.
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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 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.
ARTICLE VIII
1. By execution of the First Investors Individual Retirement Account Application
(the "Application"), the individual named therein (the "Depositor") has applied
for an Individual Retirement Account (the "Account") described in Section 408(a)
of the Internal Revenue Code of 1986 (the "Code") in order to provide for his or
her retirement and for the support of his or her beneficiaries after death. The
Custodian, by executing the Application, has established an Account for the
Depositor and has accepted its appointment as Custodian of the account. The
Depositor and the Custodian hereby agree that the Account shall be governed by
the provisions of the Agreement and the Application which is made a part hereof.
The Account is created for the exclusive benefit of the Depositor and his or her
beneficiaries.
2. (a) Annual contributions must be made in cash by check or money order payable
to "First Investors Corporation" and may be made in one or more payments;
provided, however, that no such payment shall be smaller in amount than the
minimum amount, if any, required for investment in the securities of the
Designated Investment Company. The Custodian shall have no obligation to compel
the Depositor to make any contribution, nor shall it be required to notify the
Depositor of the existence or amount of an "excess contribution", if any, as
that term is defined in Section 4973(b) of the Code. Annual contributions may be
made to the Account for the benefit of the Depositor by his or her employer.
(b) Contributions which qualify as "rollover contributions" described in Section
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code may be made
to the Account; provided, however, that such contributions consist solely of
cash (made by check or money order payable to "First Investors Corporation") in
an amount no smaller than the minimum amount, if any, required for investment in
the securities of the Designated Investment Company, and/or securities of a
Designated Investment Company. The
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Depositor shall identify rollover contributions as such in writing and the
Custodian shall rely on such identification. A contribution identified in
writing by the Depositor as a rollover contribution from a qualified retirement
plan shall not constitute an Account separate from any Account established
hereunder to which annual contributions have been or will be made, unless the
Depositor instructs the Custodian otherwise.
3. The Custodian shall maintain a record of the Account for the Depositor
reflecting his or her contributions, the investment thereof, and any accretions
upon such investments.
4. (a) The Custodian shall invest all such cash contributions less unpaid
custodial fees in the securities of the Designated Investment Company specified
by the Depositor in the Application and the Custodian or its nominee shall be
the holder of record, and the Depositor shall be the beneficial owner of all
such securities and any other property in the Account. The term "Designated
Investment Company" shall mean a registered investment company of the open-end
management type or unit investment trust type, the securities of which are
sponsored, distributed and/or underwritten by First Investors Corporation,
provided however, that the purchase of a Periodic Payment Plan with insurance
shall not be permitted. The Depositor (or following the death of the Depositor,
his or her beneficiary) may, by instructions given to the Custodian, determine
the investment in which his or her Account is to be invested or reinvested at
any time and from time to time. The Depositor must provide specific instructions
for specific purchases, sales, exchanges, and other transactions. By giving such
instructions to the Custodian, the Depositor will be deemed to have acknowledged
receipt of the prospectus, if any, for any shares or other investment vehicles
in which the Depositor directs that the Custodian invest assets in his or her
Account. The Custodian shall be responsible for executing such instructions
promptly; provided, however, that neither the Custodian, the transfer agent,
Administrative Data Management Corp., nor any affiliated company shall be
obligated to invest any portion of the Depositor's initial contribution to his
or her Account until seven (7) calendar days have elapsed from the date of
acceptance of the application or agreement by or on behalf of the Custodian.
Investments held in the Account may be divided between or among more than one
Designated Investment Company.
(b) All cash dividends and capital gains distributions received upon assets in
the Account shall be reinvested in the securities of the Designated Investment
Company and credited to the Account. In the event that, with respect to any such
dividends and distributions, the Custodian as holder of record may elect to
receive such dividend or distribution in either additional shares, cash or other
property, the Custodian shall elect to receive such
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distribution in additional shares. Sales charges attributable to the acquisition
of securities shall be charged to the Account for which such securities are
acquired. No part of the funds in the Account shall be invested in life
insurance contracts.
(c) The Custodian or its agent shall deliver, or cause to be executed and
delivered, to the Depositor all notices, prospectuses, financial statements,
proxies, voting instruction cards, and proxy soliciting material relating to
securities held in the Account. The Custodian in its capacity as Custodian
hereunder or its agent shall vote all shares of the Designated Investment
Company held hereunder in accordance with the written instructions of the
Depositor.
5. The Depositor shall have the right, prior to completion of distribution of
his or her Account, by written notice to the Custodian or its agent, to
designate, revoke, and to change a designation of a beneficiary or beneficiaries
of any distribution from the Account following the death of the Depositor, and
if no such beneficiary is designated in accordance herewith the Depositor's
beneficiary shall be his or her estate.
6. The Depositor shall not use the Account or any portion thereof as security
for a loan, nor shall the individual or his or her beneficiary engage in any
transaction prohibited by Section 4975 of the Code.
7. (a) Neither the Custodian, its agent nor any affiliates shall be responsible
for any liability arising out of this Agreement except such liability as is
occasioned by the negligence or willful misconduct of the Custodian, its agent
or affiliates. Neither the Custodian, its agent nor any affiliates shall be
responsible for any action or no action taken at the Depositor's request and
each may rely upon and shall be protected in acting upon any written order from
the Depositor or any other notice, request, consent, certificate or other
instrument reasonably believed by the Custodian, its agent or any affiliate to
be genuine and to have been properly executed. Neither the Custodian, its agent
nor any affiliates shall be liable to pay interest on any cash or cash balances
maintained in the Account which has not been invested.
(b) Neither the Custodian, its agent nor any affiliates shall be obligated to
defend or engage in any suit with respect to the Account unless each shall first
have agreed in writing to do so and shall have been fully indemnified to the
satisfaction of the Custodian, its agent and/or any affiliates. The Depositor
shall at all times indemnify and hold harmless the Custodian, its agent and any
affiliates from any liability arising from any action taken by the Custodian,
its agent or any affiliates upon the written instructions of the Depositor.
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(c) The Custodian may resign at any time upon sixty (60) days' notice in writing
to the Depositor and may be removed by the Sponsor (First Investors Corporation)
or the Depositor at any time upon thirty (30) days' written notice to the
Custodian or such shorter notice as may be acceptable to the Custodian, which
successor shall be a bank or such other qualified person under Section 408(a)(2)
of the Code. If within sixty (60) days after the Custodian's resignation or
removal the Depositor or the Sponsor has not appointed a successor custodian
which has accepted such appointment, the custodian shall, unless it elects to
terminate the Account, appoint such successor itself. Upon receipt by the
Custodian of written notice of acceptance of such appointment by a successor
custodian, the Custodian or its agent shall transfer and pay over to such
successor the assets of the Account and all records pertaining thereto. In
connection with such transfer, however, the Custodian or its agent is authorized
to reserve such sum of money as is necessary for the payment of its fees.
(d) The Custodian shall terminate the Account if within sixty (60) days after
the removal or resignation of the Custodian no qualified successor custodian has
notified the Custodian of its acceptance to act. Termination of the Account
shall be effected by distributing the assets of the Account by a single sum
payment in cash or in kind as the Depositor may elect. Upon completion of such
distribution, the Custodian, its agent and any affiliates shall be relieved from
all further liability with respect to all amounts so distributed.
8. (a) The Depositor agrees that the fees of the Custodian as set forth in the
Application shall be paid when due. Such fees may be waived by the Custodian at
any time and may be revised by the Custodian upon forty-five (45) days' written
notice to the Depositor. Custodial fees which have been revised in accordance
with this Section will become legally binding upon the Depositor unless he or
she objects by sending written notice of such objection to the Custodian within
forty-five (45) days of the date of the Custodian's or its agent's notice to the
depositor of such revision.
9. The Custodian appoints Administrative Data Management Corp., the transfer
agent for each of the Designated Investment Companies hereunder, as its agent
for receiving and processing contributions, transferring assets of the Account,
processing shareholder correspondence (e.g., revocations and designation of
beneficiaries), sending required notices and other documents relating to the
Account and voting shares in the Account hereunder.
10. The Federal Deposit Insurance Corporation (FDIC) does not insure amounts
invested in an Individual Retirement Account merely because the trustee or
custodian, such as the Custodian, is an
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institution the accounts of which are covered by such insurance. Only
investments in the accounts of such institutions themselves are insured by the
FDIC subject to its rules and regulations.
11. This Agreement may be amended by the Sponsor (First Investors Corporation)
by submitting a copy of any such amendment to the Depositor and to the Custodian
at least thirty (30) days in advance of the effective date of any such
amendment; provided, however, that no such advance submission shall be required
in the case of any amendment that may be required by the Internal Revenue
Service, from time to time, so that the Account shall remain an Individual
Retirement Account under Section 408 of the Code. For purposes of Article VII, a
Depositor shall be deemed to have consented to any amendment not required by the
Internal Revenue Service if he or she does not terminate the Account before the
effective date of such amendment.
12. This Agreement shall be construed, administered and enforced according to
the laws of New Jersey.
GENERAL INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF THE FORM
Form 5305-A is a model custodial account agreement that meets the requirements
of section 408(a) of the Code 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 compliance
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
receive from your custodian, see Pub. 590, Individual Retirement Arrangements
(IRAs).
<PAGE>
DEFINITIONS
Custodian - The Custodian must be a bank or savings and loan association, as
defined in Section 408(n) of the Code, or any person who has the approval of the
IRS to act as custodian.
Depositor - The Depositor is the person who establishes the IRA 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 required only for an IRA
for which a return is filed to report unrelated business taxable income. 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 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) of the Code have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that re agreed to by the Depositor and the 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 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.
<PAGE>
IMPORTANT INFORMATION
This IRA Master Account Application applies to all accounts registered
identically in funds sponsored by First Investors Corporation and its
affiliates.
Section 4. I understand that through accumulated investments I can reduce my
sales charges on purchases of Class A shares. In the next 13 month period, I
plan to invest in shares of one or more First Investors eligible funds the
aggregate amount checked in this application. I understand that I may combine
Class A and Class B shares of any eligible (including Class B shares of the
money market funds) funds to qualify for this reduced sales charge. I hereby
irrevocably appoint First Investors Corporation ("FIC") my agent and my attorney
with full power to redeem any shares held in escrow, if necessary. I understand
that if the amount indicated is not invested within 13 months, the reduced sales
charge does not apply.
Section 8. I wish to establish an automatic payroll investment program and
authorize my employer to initiate credit entries of amounts deducted from my pay
to an account at First Financial Saving Bank, S.L.A. ("FFS"). I further
authorize FFS to accept any such funds and to transfer them to First Investors
for investment in the First investors account(s) designated in the application
or as changed by my written instructions to FIC. FFS shall have no
responsibility for the correctness thereof or for determining the existence of
any further authorization relating hereto. I agree that neither FFS, FIC nor any
affiliates will be liable for any loss, liability, cost or expense from acting
upon such instructions. I understand that in order to terminate this
authorization I must give written notice to my employer.
Section 9. I authorize FIC to initiate debit entries to my bank account listed
in this application. Investments will be made the same day my bank account is
debited or, if a weekend or holiday, on the following business day. If such
debit is dishonored by the bank upon presentation, FIC may discontinue this
service and cancel the shares purchased and charge me for any loss.
Section 10. I authorize Administrative Data Management Corp. ("ADM"), as
transfer agent, to accept and act upon telephone instructions from myself, or my
FIC Registered Representative (if I have so authorized), to effect exchanges of
shares among eligible funds owned by me.
If I authorize my FIC Registered Representative to effect telephone exchanges
upon my instruction, I understand that this authorization applies to my
representative only as long as the Registered Representative is assigned to my
account(s), according to the books
<PAGE>
and records of FIC. If my Registered Representative is replaced with a new FIC
Registered Representative by FIC, the telephone exchange privileges assigned to
my former representative will automatically be transferred to the new FIC
Registered Representative. Telephone exchange privileges may be modified or
terminated at any time at the sole discretion of FIC, ADM, or the fund(s). This
authorization may be terminated by submitting written notice to ADM. Please
allow 5 days processing time after receipt.
In acting upon telephone instructions, First Investors and the Funds use
procedures which are reasonably designed to ensure that such instructions are
genuine, such as (1) obtaining some or all of the following information: account
number, name and social security number, mother's maiden name, last elementary
school attended; (2) recording all telephone instructions; and (3) sending
written confirmation of each transaction to my address of record. I understand
that this policy places the entire risk of loss for unauthorized or fraudulent
transactions on me, except that if First Investors Corporation, the Funds, or
their affiliates do not follow reasonable procedures, some or all of them may be
liable for any such losses.
Prior to making an exchange, I have received and read the prospectus of the fund
into which the exchange is being made. Only one telephone exchange is permitted
within any 30 day period for each account authorized. Each of the First
Investors funds reserves the right to change or terminate the exchange
privilege. An administrative fee may be charged on exchanges and may be waived
at any time.
Executive Investors Funds
If I have purchased Executive Investors Funds, I have received the required
Disclosure Form.
