EXHIBIT 14
INDIVIDUAL RETIREMENT ACCOUNT FORM & ROTH IRA
THE PARNASSUS IRA
INFORMATION & APPLICATION
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What You Should Know
What is an IRA? An IRA is an Individual Retirement Account that allows you
to put away money for your retirement and have the earnings be tax-deferred
until withdrawal. Contributions to the account may be partially or fully
tax-deductible depending on whether or not you actively participate in a
retirement plan where you work. See below for more details.
Who can open an IRA? Anyone under age 70 1/2 who earns wages or a salary
(even if self-employed) can open and contribute to an IRA. If you have a working
spouse, you can open two Parnassus IRAs. If you have a non-wage earning spouse
(i.e., one who received no compensation during the year) and file a joint
return, that spouse can open a separate "spousal" IRA.
How much may I contribute to an IRA? You may contribute up to $2,000 a year
to your IRA or 100% of your earned income, whichever is less. If you file a
joint return, up to $2,000 may be contributed to a spousal IRA, even if one
spouse has little or no compensation. The total combined contribution may be as
much as $4,000 for the year.
How do I know if I may take a deduction? You may take the maximum deduction
of $2,000 ($4,000 with a spousal IRA) if:
1) Neither you nor your spouse participate in a retirement program where
you work. This is true regardless of your income; or
2) You are single, actively participate in a retirement program and your
adjusted gross income is $25,000 a year or less; or
3) You are married, either you or your spouse actively participates in a
retirement plan, you file a joint return and your adjusted gross income
is $40,000 or less. (You cannot take the maximum deduction if you are
married and file a separate return.)
You may take a partial deduction if:
1) You are single, participate in a retirement plan and your adjusted gross
income is between $25,000 and $35,000; or
2) You are married, file a joint return, one or both of you participate in
a retirement plan and your adjusted gross income falls between $40,000
and $50,000; or
3) You are married, file a separate return and your spouse participates in
a retirement plan and your income is less than $10,000.
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The Taxpayer Relief Act of 1997 gradually increases the AGI phaseout limits
for deductible IRA contributions by individuals who are active participants in
employer-sponsored retirement plans. Active participants below a "threshold
level" of income may make deductible contributions. The maximum $2,000 deduction
available to active participants is reduced proportionately over a "phaseout"
range. Active participants with income above the phaseout range are not entitled
to any deduction.
The phaseout limits are increased as follows:
Tax Years Single Married Taxpayers
Beginning Taxpayers Filing Jointly
1998 $30,000-$40,000 $50,000-$60,000
1999 $31,000-$41,000 $51,000-$61,000
2000 $32,000-$42,000 $52,000-$62,000
2001 $33,000-$43,000 $53,000-$63,000
2002 $34,000-$44,000 $54,000-$64,000
2003 $40,000-$50,000 $60,000-$70,000
2004 $45,000-$55,000 $65,000-$75,000
2005 $50,000-$60,000 $70,000-$80,000
2006 $50,000-$60,000 $75,000-$85,000
2007 $50,000-$60,000 $80,000-$100,000
In all cases, refer to a qualified tax professional or the Internal Revenue
Service for specific information
If I cannot take a deduction for my IRA contribution, why should I
contribute? There are still benefits to having an IRA even if you cannot take a
deduction. The earnings on your IRA are tax-deferred until distribution and that
can make a big difference. Also, consider the goal of an IRA which is to provide
enough money to live comfortably during retirement. By making regular
contributions to an IRA, you can provide for that comfortable retirement.
Note: If you make non-deductible contributions, you must file IRS Form
8606. Be sure to keep good records of these contributions so you won't have to
pay taxes on them again when distribution occurs.
When may I withdraw? You may withdraw from your IRA at any time, but
withdrawals before age 59 1/2 may be subject to a 10% penalty tax. Please refer
to page 9 for additional information regarding distributions. If you die, the
balance of your IRA can be paid to the beneficiary (or beneficiaries) you
choose.
May I transfer an existing IRA to Parnassus? Yes. There are no tax
penalties and no limits on the amount you can transfer. Just fill out the
Parnassus IRA Transfer Authorization Letter on page 19.
May I rollover an existing IRA to Parnassus? Yes. If you elect to receive a
cash distribution from another IRA, you can avoid paying current taxes on the
distribution by "rolling it over" into a Parnassus IRA. The rollover must be
made within 60 days. However there are certain restrictions imposed by the
Internal Revenue Code on multiple rollovers within a 12-month period.
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What's the difference between an "IRA rollover" and an "IRA transfer"? An
"IRA rollover" is when you've already received a lump sum distribution from
another IRA and you take the money and put it into a new IRA within a sixty day
period. An "IRA transfer" is when you have one IRA custodian/trustee transfer
your money directly into another IRA and you never touch the money. So, if you
already have the money in your possession and you want to start a Parnassus IRA,
you'll be opening a "rollover" IRA. If your IRA is with another custodian and
you want to move that money into a Parnassus IRA, you can arrange for a
"custodian transfer" by filling out the Parnassus IRA Transfer Authorization on
page 19.
What about a "direct rollover" from my company's retirement plan? If you
receive a distribution from your employer's qualified retirement plan, you may
avoid paying current taxes or having the mandatory 20% federal withholding tax
applied to your distribution by "directly rolling over" your distribution from
your current custodian/trustee into a Parnassus IRA. There are no limits on this
amount. Some distributions, such as a required minimum distribution after your
attainment of age 70 1/2 and distributions payable in substantially equal
periodic payments over ten or more years, are not eligible for a "direct
rollover". You can arrange for a "Direct Rollover" by contacting your current
plan administrator and requesting the proper paperwork.
What investment options do I have? Parnassus offers three socially
responsible investment alternatives for your IRA. Your retirement funds can be
invested in one or any combination of the following:
The Parnassus Fund
The Parnassus Fund's investment objective is long-term growth.
Since the Fund seeks growth of capital, investors assume a
moderate amount of risk. All investments in The Parnassus Fund
are subject to a sales charge (maximum 3.5%).
The Parnassus Income Trust
The Parnassus Income Trust's investment objective is current
income and either capital appreciation or preservation. The
Income Trust is more conservative and assumes less risk than The
Parnassus Fund. The Parnassus Income Trust offers two portfolios
for IRA investments:
The Equity Income Fund invests in dividend paying stocks.
The Fixed-Income Fund invests in bonds and other fixed-income
securities.
Under normal circumstances, the Fixed-Income Fund will have the
highest yield. While the yield of the Equity Income Fund will
normally be somewhat lower than the yield of the Fixed-Income
Fund, the Equity Income Fund has the potential to provide
capital appreciation since it invests in stocks.
There is no sales charge for either fund of The Parnassus Income
Trust.
Our investment selections provide you with a flexible retirement savings
program that can easily be tailored to your changing investment objectives or
changing market conditions. For more detailed information, please refer to the
prospectus for the Fund you are interested in.
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Can I make contributions to my IRA automatically? Yes. Parnassus offers
automatic investment plans. You may arrange to have contributions of $50 or more
automatically deducted from your checking or savings account and invested in
your IRA. All automatic contributions are considered contributions for the
current tax year. When setting up your investment plan, make sure not to exceed
your $2,000 contribution limit.
Are there any special fees? There is a custodial fee of $15.00 a year for
maintaining the IRA. There is also a small sales charge (maximum of 3.5%) on
investments in The Parnassus Fund. There is no sales charge for investments in
The Parnassus Income Trust. If you decide to have more than one IRA account, we
will only charge you one custodial fee.
How do I open an account? First, read The Parnassus Fund or The Parnassus
Income Trust prospectus that preceded or accompanied this brochure. Use that
information to determine which investment option is right for you. Also read the
Disclosure Statement contained in this brochure. Then fill out and sign the IRA
Agreement and Beneficiary Form. Finally, mail your completed forms along with a
check in the amount of your initial investment, a minimum of $500, to:
Parnassus, One Market-Steuart Tower #1600, San Francisco, California 94105.
Want more information? Call Parnassus at 800-999-3505. If you have
questions about whether an IRA is appropriate for you or about personal tax
consequences of contributing to an IRA, you should contact the Internal Revenue
Service or consult a tax adviser.
Instructions For Opening A Parnassus IRA
1. Read The Parnassus Fund or The Parnassus Income Trust prospectus carefully
before making an investment. Also, be sure to read the Disclosure Statement
in this brochure; it covers some very important information on the
Parnassus IRA. If you have any questions about the tax consequences of
setting up an IRA, you should consult a tax adviser.
2. Fill out and sign the Parnassus IRA Adoption Agreement Form and Designation
of Beneficiary Form. If you are opening both a regular and a spousal IRA,
you have to fill out two separate Agreements.
3. If you are transferring from another IRA, fill out the Transfer
Authorization Letter at the back of this brochure. Call your current
custodian/trustee to see if there are any special requirements.
4. If you are rolling money over from a qualified retirement plan, contact
your current plan administrator for rollover requirements.
5. Make your check out to The Parnassus Fund or The Parnassus Income Trust and
send it with all the forms to: Parnassus, One Market-Steuart Tower #1600,
San Francisco, California 94105.
Union Bank of California will act as custodian of your account. The
Parnassus Fund or The Parnassus Income Trust will send you a confirmation
that your money has been received and that the IRA has been established.
Do not send any transfer or rollover paperwork to Union Bank of California
as Parnassus handles all trustee work for Union Bank of California.
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THE PARNASSUS INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
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General
Your Individual Retirement Account ("IRA") is a custodial account for the
benefit of you or your beneficiaries. The custodian of the IRA is named on the
IRA Adoption Agreement Form.
Internal Revenue Service ("IRS") regulations require that you be given this
Disclosure Statement to assure that you are made aware of some of the statutory
rules governing an IRA.
Because the rules with respect to IRAs are very complex, and because
misunderstanding or disregarding the rules may have serious tax implications,
you should consult your own tax adviser if you have questions about the
information contained in this disclosure statement. Further information can also
be obtained from any district office of the Internal Revenue Service.
Traditional IRAs
Eligibility
You are allowed to make "regular" contributions into a "contributory" IRA
for a year only if you have received compensation during that year from the
performance of personal services. "Compensation" includes such items as
salaries, bonuses, commissions, and in the case of a self-employed person, net
earnings from self-employment. For tax years beginning after 1984, all taxable
alimony and separate maintenance payments received by an individual under a
decree of divorce or a separate maintenance agreement are treated as
compensation.
You may not make regular contributions into an IRA for the taxable year in
which you attain the age of 70 1/2 or thereafter.
Contributions
The law permits you to make regular contributions to your IRA of up to 100%
of your earned income, not to exceed $2,000 for each year in which you are
eligible. If you are a married taxpayer and both you and your spouse are
eligible, each of you is separately entitled to contribute up to 100% of your
respective income, not to exceed $2,000.
Spousal IRAs
Eligibility
If you are eligible to make contributions to an IRA, a Spousal IRA
arrangement may be used for your spouse who has no compensation or who elects to
be treated as having no compensation. A Spousal IRA arrangement requires that
you and your spouse be married at the end of the tax year for which a
contribution is made and that you file a joint federal income tax return for
that year. The Spousal IRA is treated as the property of your spouse and, except
for contribution/deduction limits, is subject to the same rules as a regular IRA
(such as mandatory distribution rules).
NOTE: An IRA for the compensated spouse is not required if contributions
are desired only for the noncompensated spouse.
Contributions
The contribution limit to a qualified Spousal IRA arrangement is the lesser
of 100% of the compensated spouse's earned income or $4,000 provided no
contribution to either account exceeds the $2,000 limit for the year.
Although the compensated spouse may no longer deposit to a Traditional IRA
for the year in which he or she reaches age 70 1/2, that individual may continue
to contribute to the noncompensated spouse's IRA until the year in which the
noncompensated spouse reaches age 70 1/2. This contribution to the IRA is
limited to the lesser of 100% of the compensated spouse's earned income or
$2,000.
Revoking Your Account
You have the right to revoke this IRA within seven calendar days of the
date you receive this Disclosure Statement, which is the date this IRA is
established. To use your right to revoke the IRA, simply notify Parnassus in
writing at One Market-Steuart Tower #1600, San Francisco, CA 94105. Written
notice must be sent by first-class mail and will be accepted as of the date such
notice is postmarked. If you use this right, you are entitled to a refund of
your entire contribution to the IRA. If you do not use this right within seven
calendar days of the date you receive this Disclosure Statement, you have
accepted the terms and conditions of the IRA you have established. Revocations
will be reportable to the IRS.
Deductibility of IRA Contributions
For tax years beginning in 1987 and thereafter, if you (or your spouse) are
an active participant in an employer-maintained retirement plan, you may be
unable to deduct all or a portion of an otherwise eligible contribution,
depending on your federal adjusted gross income.
An employer-maintained retirement plan is a:
1. Pension, profit-sharing (including a 401(k) plan) or stock bonus plan
qualified under Section 401(a) of the Internal Revenue Code ("the Code")
including a Keogh Plan;
2. Qualified annuity under Section 403(a) of the Code;
3. Simplified Employee Pension Plan (SEP) under Section 408(k) of the Code;
4. Retirement plan established by a government for its employees (does not
include a Section 457 plan);
5. Annuity contract purchased by certain tax-exempt organizations or public
schools under Section 403(b) of the Code; and
6. Pre-1959 pension trust described in Section 501(c)(18) of the Code.
You are an "active participant" for a year if you (or your spouse) are
covered by a retirement plan. 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. For example, if you are
covered under a profit sharing plan, certain government plans, a salary
reduction arrangement (such as a tax-sheltered annuity arrangement or a 401(k)
plan), a simplified employee pension (SEP) plan or a plan which promises you a
retirement benefit which is based upon the number of years of service you have
with the employer, you are likely to be an active participant. Your Form W-2,
Wage and Tax Statement, for the year starting with the 1987 tax year, should
indicate your participation status.
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 with the
employer for part of the year.
You are not considered an active participant if you are covered in a plan
only because of your service as 1) an Armed Forces Reservist for 90 or fewer
days of active service, or 2) a volunteer fire fighter covered for fire fighting
service by a government plan. Of course, if you are covered in any other plan,
these exceptions do not apply.
If you are married but file a separate federal income tax return and lived
apart from your spouse during all of the tax year, your spouse's active
participation does not affect your ability to make deductible contributions.
You should consult with your employer and your tax adviser to determine
your status as an active participant and your ability to make deductible
contributions.
Non-deductible IRA Contributions
If your deduction is limited due to your active participation in a
retirement plan (see Deductibility Rules on page 1) then any amount contributed
above the deductible limits will be considered a non-deductible contribution.
You may also elect to treat contributions which would be deductible as
non-deductible contributions so they will not be subject to federal income tax
when they are distributed to you.
IRS Form 8606 (Non-deductible IRA Contributions. IRA Basis, and
Non-deductible Distributions) must be filed with your federal income tax return
for any year in which you make a non-deductible contribution.
Contribution Deadline
The contribution deadline for a regular or spousal contribution is the due
date of your federal income tax return excluding extensions. This date is
generally April 15.
Additional Information About IRAs
Under the provisions of Section 408(A) of the Internal Revenue Code of
1986, as amended, banks, savings and loan associations, mutual funds and credit
unions are permitted to establish IRAs for the exclusive benefit of an
individual or beneficiaries provided the written agreement meets certain
requirements.
These requirements are that:
1. Except for rollover contributions, contributions to the IRA must be in cash
and will not be accepted for the taxable year in excess of:
a) $2,000 on behalf of an individual where a contribution would
be allowed the participant under Internal Revenue Code provisions
governing regular IRAs (IRC Section 219), or
b) $4,000 if the contributions are made to the IRA of the spouse who
has compensation during the year and to the account of the spouse
who has no compensation or elects to be treated as having no
compensation.
2. No part of the funds will be invested in life insurance contracts.
3. The interest of an individual in the balance of the IRA is non-forfeitable.
4. The assets of the IRA will not be commingled with other property except in
a common trust or investment fund.
5. No part of the funds can be invested in collectibles (as defined in IRC
Section 408(m)) including any work of art, rug or antique, metal or gem,
stamp or coin, alcoholic beverage, or any other tangible property
specified by the IRS. Exception for certain coins: The acquisition of
certain U.S. government-issued gold and silver coins and any state-issued
coins are permitted as investments in an IRA.
Contribution to a Simplified Employee Pension Plan
Your employer or employers may make contributions into your IRA under the
rules which pertain to Simplified Employee Pension Plans (SEPs) in amounts which
do not exceed the lesser of 15% of your compensation from each such employer or
$30,000. The contributions must be made based upon a written allocation formula
developed by your employer, a copy of which will be provided to you. Your
employer may contribute to this IRA, even if you are a participant in a
qualified retirement plan in the year for which the SEP contribution is being
made, and even if you have attained the age of 70 1/2 (the age at which you
would normally no longer be eligible to make regular IRA contributions).
Excess Contributions
Any contributions to the IRA that exceed the allowable limits (i.e., $2,000
or 100% of your compensation) will be assessed a 6% non-deductible excise tax
(IRC Section 4973). This tax is payable by you (or your compensated spouse) for
each year the excess is permitted to remain in the IRA. However, you may avoid
the penalty if the excess contribution has not been taken as a deduction and if
the excess, and all interest earned on it, is removed from the IRA before the
due date for filing the federal income tax return, including extensions, for the
year for which the excess contribution was made. The interest earned on such
excess contribution that is paid to you is taxable as income and will be deemed
to have been earned and taxable in the tax year during which the excess
contribution was made. The 6% excess contribution penalty may be eliminated for
future tax years by withdrawing the excess contribution from the IRA before the
end of the tax year or by under-contributing for that year by an amount equal to
the excess contribution. The removed excess contribution will not be subject to
income tax provided the contribution for the year during which the excess
contribution was made did not exceed $4,000 (excluding rollover contributions)
and no deduction was allowed for the excess contribution.
Rollovers and Transfers
A transfer occurs when the funds are moved directly from one financial
institution to another without the account owner having direct control or
custody of the funds. There is no time or frequency limits on transfers.
A rollover is a distribution of cash or other assets that you receive from
one retirement plan and deposit into another plan. The amount rolled over is
tax-deferred until you or your beneficiary(ies) begin receiving distributions
from the new plan.
There are two types of rollover contributions to an IRA. One involves
depositing funds received from one IRA into another IRA. The other involves
depositing funds received from a qualified retirement plan or tax-sheltered
annuity into an IRA.
Rollover From One IRA Into Another
To allow movement of IRA funds between IRAs, you may withdraw all or part
of the assets from one IRA and roll them to another IRA. If the funds are rolled
over within 60 calendar days of receipt of the distribution, the amount rolled
over will not be taxable to you. In addition, the amount rolled over is not
deductible on your tax return.
You may only receive one distribution from an IRA in a 12-month period for
the purpose of rolling it over. The 12-month period begins on the date you
receive the distribution, not on the date you roll it to another IRA. For
example, if you withdraw funds from IRA-1 on July 15, 1997, and roll them over
within 60 calendar days into IRA-2, you cannot roll over any other funds from
IRA-1 until July 15, 1998. Any additional distributions received before July 15,
1998, would not be eligible for rollover treatment. Those distributions would be
subject to the 10% tax on premature distributions.
Additionally, funds rolled over to the other IRA cannot be rolled over to a
third IRA until the end of the 12-month period after the original distribution
date. Continuing with our example, the funds rolled to IRA-2 would have to
remain in IRA-2 until July 15, 1998.
These rules apply separately to each IRA you own. For example, if you have
two IRAs, IRA-1 and IRA-2, and you roll over assets of IRA-1 into a new IRA-3,
you may also make a rollover from IRA-2 into IRA-3, or into any other IRA within
one year after the rollover distribution from IRA-1. These are both rollovers
because you have not received more than one distribution from either IRA within
one year.
Amounts that are required to be distributed during a particular year under
the required distribution rules that apply at age 70 1/2 are not eligible for
rollover treatment.
Rollover From a Qualified Retirement Plan or Tax-Sheltered Annuity to an IRA
If you (or your surviving spouse after your death) receive a distribution,
other than a required minimum distribution, from your employer's qualified
pension, profit-sharing (including a 401(k) plan), Keogh plan or stock bonus
plan, annuity plan, or tax-sheltered annuity plan (403(b) plan), you may be able
to roll over all or part of it into an IRA.
For distributions made on or before December 31, 1992, a "qualifying
rollover distribution" from a qualified retirement plan and tax-sheltered
annuity program may be rolled over to an IRA. The following "qualifying rollover
distributions" may be rolled over to an IRA:
1. A "lump-sum distribution" which is a distribution(s) of your entire account
balance in the plan received in one taxable year (usually a calendar year)
because you:
a) died;
b) are permanently disabled (applies only to self-employed persons);
c) attained age 59 1/2; or
d) have separated from service (does not apply to self-employed persons).
2. A "partial distribution" which is a distribution of at least 50% of your
account balance (determined immediately before the distribution) received
because you:
a) died;
b) are permanently disabled; or
c) have separated from service. To qualify as a partial distribution, it
cannot be part of a series of periodic payments.
3. A distribution of your entire account balance paid to you in one taxable
year because the plan has been terminated (does not apply to a
tax-sheltered annuity).
4. A distribution pursuant to a Qualified Domestic Relations Order. If you (as
a spouse or former spouse of the employee) receive from a qualified
employer plan a distribution that results from divorce or similar
proceedings, you may be able to roll over all or part of it into an IRA if:
a) it is the balance to your credit (not the employee's credit) in the
plan;
b) you receive it within one tax year (your tax year, not the plan's
year); and
c) in the case of a distribution of property other than money, you roll
over the same property you received from the plan.
A domestic relations order is a judgment, decree, or order (including
approval of a property settlement agreement) that is issued under the
domestic relations law of a state. A "Qualified Domestic Relations Order"
gives to a spouse, former spouse, child, or dependent of a participant in a
retirement plan the right to receive all or part of the benefits that would
be payable to the participant under the plan. The order requires certain
specific information and it may not alter the amount or form of the
benefits of the plan.
5. A distribution of your voluntary deductible employee contribution's (DECs)
that you made to the plan from 1982 through 1986.
6. A distribution from an Employee Stock Ownership Plan that:
a) you receive after attaining age 55 and participating in the plan for 10
years;
b) is made because of the diversification requirements of the plan; and
c) consists of at least 25% of the value of stock acquired for you after
1986.
For distributions made on or after January 1, 1993, an eligible rollover
distribution from a qualified retirement plan and a tax-sheltered annuity
program may be directly transferred (direct rollover) or rolled over to an IRA.
Generally, an eligible rollover distribution is any distribution except:
a) A distribution that is (1) one of a series of substantially equal
periodic payments over the single or joint life expectancy of the
employee and the beneficiary or (2) for a specific period of ten years
or more; and
b) A required distribution for an employee age 70 1/2 or older.
If you receive one of the qualifying distributions described above, only
the taxable amount of the distribution may be deposited into an IRA within 60
calendar days. If you do not deposit all of the taxable amount of the
distribution, you must include the amount you keep as ordinary income in the
year you receive it. You may also have to pay a 10% premature distribution
penalty tax on the amount you keep if you are under age 59 1/2.
Note: These rollover rules apply for federal income tax purposes only.
State income tax rollover rules may vary. Please check with your tax adviser
regarding the effect of state tax laws. Additional penalties may apply under
state tax law.
Distributions
Taxation of Distributions
Distributions from an IRA are generally fully taxable as ordinary income.
They are not eligible for the special tax treatment available to certain lump
sum distributions from pension and profit sharing plans under IRC Section 402.
If you have made non-deductible contributions to an IRA, a certain
percentage of your distributions will be nontaxable. This calculation is
completed using IRS Form 8606, which you must file with your income tax return
for any year in which you withdraw from your IRAs.
Penalty for Premature Distribution
In addition to any regular tax that may be payable, if you take
distributions from the IRA before you reach age 59 1/2, (exceptions to the tax
penalty apply), you will be assessed a 10% non-deductible excise tax on the
taxable amount of the distribution.
Amounts treated as distributions from the IRA because of pledging the IRA
or prohibited transactions will also be considered premature distributions if
they occur before you reach age 59 1/2 and are not disabled. Additional
premature distribution penalties may apply under state law.
Exceptions to the Penalty Tax
No penalty will be imposed on distributions:
o after you become disabled;
o of substantially equal periodic payments (at least annually) for your
single life expectancy or the joint life expectancy of you and your
designated beneficiary; however, you must continue to received the
periodic payments for the longer of five years or until you are age
59 1/2. If you stop receiving periodic payments prior to the time that
applies to you, all of the distributions you received will be subject to
the 10% excise tax in the year you stop receiving distribution;
o made to your former spouse or children under a qualified court order
relating to divorce;
o to your beneficiary after your death;
o taken for medical expenses exceeding 7.5 percent of your Adjusted Gross
Income (AGI beginning in 1997);
o taken for the purchase of health insurance if you have been receiving
unemployment compensation for more than 12 weeks. The amount you
withdraw may not exceed the amount you paid for insurance protection. If
you are self-employed you qualify for the early distribution penalty
exception to the extent you would receive unemployment compensation but
for the fact that you are self-employed (beginning in 1997);
o used to pay "qualified higher education expenses" for yourself, your
spouse, or your children or grandchildren or the children or
grandchildren of your spouse (beginning in 1998). Qualified Higher
Education Expenses include tuition, fees, books, supplies, and equipment
required for the enrollment or attendance at a post secondary
educational institution;
o to a qualified first-time homebuyer for the purchase of a principal
residence (beginning in 1998). First-Time Homebuyer - In order to be
considered a first-time homebuyer, you (and your spouse if married) must
not have had an ownership interest in a principal residence during a
two-year period ending on the date that the new home is acquired.
Qualified First-Time Homebuyer Distribution - Qualified first-time home
buyer distributions are withdrawals of up to $10,000 during your
lifetime that are used within 120 days of withdrawal to buy, build, or
rebuild a "first" home that will be the principal residence for you,
your spouse, any child, grandchild, or ancestor of yours or your spouse.
Note: If there is a delay or cancellation of the purchase or
construction of the first home, the amount of the distribution may be
contributed back into an IRA within 120 days of receipt.
Normal Distributions
When a normal distribution event occurs, the funds that are distributed
from the IRA or SEP are subject to ordinary income tax in the year of
distribution. However, these distributions are not subject to federal or state
premature distribution penalties. Normal distribution events occur:
o When you reach age 59 1/2; or
o When you become disabled as defined in IRC Section 72(m). Under IRC
Section 72(m)(7), the person must provide written proof that he or she
is unable to engage in any substantial gainful activity by reason of
determinable physical or mental impairment which can be expected to
result in death or to be of long continued and indefinite duration.
Distributions at Age 70 1/2
After you become age 70 1/2, minimum distributions are required from your
IRA each year. The distribution for the year in which you become age 70 1/2 must
be made no later than April 1 of the following year (the required beginning
date). Distributions for subsequent years must be taken by December 31 of each
year.
For example, if you attain age 70 1/2 in the current year, you could delay
all or part of your first year's minimum distribution until April 1 of the
second year. Since your second year's minimum distribution must be taken by
December 31, two years of distribution are taken in the second year, and because
IRA distributions are taxable for the year they are received, both distributions
are reportable and taxable to you in the second year.
Unless you withdraw the entire balance by April 1 of the year after you
reach age 70 1/2, by that date you must elect to take the distributions in a
manner which distributes the funds over a period no longer than your single life
expectancy or the joint life expectancy of you and your designated beneficiary.
If no beneficiary exists or a beneficiary other than a natural person is named
(except certain trusts), your single life expectancy must be used for this
calculation.
If you do not elect a method of distribution (i.e., single life, joint
life, etc.) by your required beginning date, Parnassus will assume you have
elected to satisfy your minimum mandatory distribution from IRA accounts at
another institution. You assume full responsibility for satisfying your required
distribution. There is a substantial penalty for excess accumulation (minimum
distribution not withdrawn).
The required minimum distribution for each year is determined by dividing
your account balance as of the end of the previous year (increased by any
outstanding rollovers) by the appropriate life expectancy.
By your required beginning date you must also elect whether you want your
life expectancy recalculated or not recalculated. If you do not make this
election by that time on a form provided by the Custodian, your life expectancy
and your spouse's life expectancy (if the designated beneficiary) will not be
recalculated.
A nonspouse beneficiary's life expectancy is not recalculated.
If recalculation is elected, a new life expectancy factor is determined
each year based upon the ages of you and/or your spouse as of your birthdays
during the year. If the person whose life is being recalculated dies, the life
expectancy for that individual becomes zero in the year following the year of
death. If recalculation is not chosen, the life expectancy is calculated by
determining the life expectancy at the end of the first distribution year and
subtracting I for each year which has elapsed since. If no recalculation is
elected, the death of the participant or the beneficiary is disregarded.
Required distributions from an IRA must satisfy the Minimum Distribution
Incidental Benefit (MDIB) rule. The rule applies to an account owner whose
beneficiary is someone other than a spouse and who elects a joint life
expectancy payout.
The MDIB rule requires that when determining the applicable life expectancy
factor of an account owner and a nonspouse beneficiary, it is necessary to
compare the factor from the joint life expectancy table to the applicable
divisor from the MDIB table. The MDIB rule then requires the use of the smaller
of the two factors.
If the minimum distribution is not withdrawn in a timely manner, a
non-deductible excess accumulation penalty tax of 50% will be assessed on the
excess accumulation (the amount of the minimum distribution not withdrawn).
If you have more than one IRA at the same or different financial
institution(s), the minimum distribution must be calculated separately for each
IRA. However. the minimum distribution from each IRA can be withdrawn from any
one or more of your IRAs.
Distributions After Death
If you die on or after the date when payments must have begun (your
required beginning date) the payments to your beneficiary or estate must
continue so that the funds will be distributed at least as rapidly as they would
have been distributed if death had not occurred.
If you die before the required beginning date, your beneficiary has the
following options:
1. The beneficiary may withdraw the entire account balance in any manner so
that the IRA is depleted by December 31 of the fifth year following the year
of death.
2. The beneficiary may withdraw the funds in a series of payments over a period
which does not exceed the beneficiary's life expectancy. These payments must
begin by December 31 of the year following the year of death if the
beneficiary is not your spouse or December 31 of the year you would have
been age 70 1/2 (if later), if the beneficiary is your spouse. If there are
multiple beneficiaries, the life expectancy of the beneficiary with the
shortest single life expectancy (generally the oldest beneficiary) must be
used.
The designated beneficiary must elect a method of distribution on a form
provided by the Custodian by December 31 of the year following the year of
death. If an election is not made by that date, distributions will be made over
the life expectancy of your designated beneficiary.
If the beneficiary is the surviving spouse, then the election must be made
by the earlier of December 31 of the fifth year after the year of death or
December 31 of the year the Depositor would have attained age 70 1/2.
If your beneficiary is your surviving spouse, he or she also has the option
of electing to recalculate his or her life expectancy. If your surviving spouse
does not make this election by December 31 following the year of your death,
your surviving spouse's life expectancy shall not be recalculated.
A spouse beneficiary may elect to roll over a distribution into his/her own
IRA or to treat the IRA as his/her own.
Estate Tax Status of Distributions
For deaths occurring after December 31, 1984, all funds held within an IRA
will be included in your gross estate for federal estate tax purposes,
regardless of the named beneficiary or manner of distribution. You should
consult your tax advisor to determine the tax consequences of a distribution
under state inheritance tax laws.
Gift Tax Status of IRA Contributions and Distributions
For federal gift tax purposes, irrevocable beneficiary designations will
not be treated as gifts. Again, you should consult your tax advisor to determine
the tax consequences of an irrevocable beneficiary designation under state gift
tax laws.
Penalty For Pledging the IRA as Security
If you pledge an IRA as security for a loan, the portion so pledged is
treated as being distributed to you in that year. In addition to any regular
income tax that may be payable on the distribution, the 10% premature
distribution penalty may be also applicable.
Penalty For Prohibited Transactions
If you or your beneficiary engages in a prohibited transaction, as
described in IRC Section 4975(c) with respect to IRAs, the IRA will lose its tax
deferred status and you must include the fair market value of the IRA, as of the
first day of the year, in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the 10% premature distribution penalty may also be applicable.
Withholding On Distributions
The entire distribution (whether or not taxable) from your IRA will be
subject to income tax withholding at the source. This means that unless you
provide a written election to waive withholding, a part of each distribution
(except transfers) will be withheld by the Custodian and paid to the government
as a prepayment of your federal income tax liability for that year. The election
to waive withholding does not apply to any distribution which is delivered
outside the United States to a U.S. citizen. Certain exceptions apply if
payments are made from an IRA to non-U.S. citizens, and if the appropriate
certifications are made by them.
Filing Requirements
Each year the Custodian will furnish you with a statement of account which
will give the amount of the contribution to the IRA, earnings accumulated,
distributions from the IRA and the total value of the IRA as of the end of the
year. Information relating to contributions and withdrawals must be reported
annually to the Internal Revenue Service by you or, in the case of a Spousal
IRA, by the compensated spouse. You (or your compensated spouse) must also file
Form 5329 (Return for Individual Retirement Savings Arrangement) with the
Internal Revenue Service for each taxable year during which you are assessed any
IRS penalty, and Form 8606 (Non-deductible IRA Contributions, IRA Basis, and
Nontaxable Distributions) must be filed if non-deductible contributions are made
to the IRA. The penalty for not filing Form 8606, when required, is $50.
IRS Approval of Plan's Format
This IRA has been approved as to form by the Internal Revenue Service. The
Internal Revenue Service approval is a determination only as to the form of the
IRA, and does not represent a determination of the merits of the IRA.
Fees
The fee for maintaining your IRA account is described in the IRA
Application and may be changed from time to time, as provided in the Custodial
Account Agreement.
Financial Information
The growth in the value of the mutual fund investments held in your
Parnassus IRA can neither be projected nor guaranteed. Growth in the value of
your Parnassus IRA will depend entirely on your investment selections. The
Fund(s) capital gains are distributed annually to shareholders. Dividends and
capital gain distributions will automatically be reinvested in additional shares
of the Fund(s). Please refer to The Parnassus Fund or The Parnassus Income Trust
prospectus for more detailed information.
<PAGE>
ADOPTION AGREEMENT
PARNASSUS INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
- --------------------------------------------------------------------------------
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (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 collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise
comply with section 408(a)(6) and Proposed Regulations section 1.408-8,
including the incidental death benefit provisions of Proposed Regulations
section 1.401(a)(9)-2, the provisions of which are incorporated by
reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
Depositor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date, (April 1
following the calendar year end in which the Depositor reaches age 70 1/2).
By that date, the Depositor may elect, in a manner acceptable to the
Custodian, to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy
of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse.
No additional cash contributions or rollover contributions may be
accepted in the account.
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, which-ever 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
to the Depositor as prescribed by the Internal Revenue Service.
Article VI
Not withstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
Article VIII
1. If the Depositor fails to make a written election of payment by his/her
required beginning date, Parnassus will assume you have elected to satisfy
your minimum mandatory distribution from IRA accounts at another
institution. You assume full responsibility for satisfying your required
distribution. There is a substantial penalty for excess accumulation
(minimum distribution not withdrawn).
2. If the Depositor dies before the required beginning date, the designated
beneficiary must irrevocably elect a method of distribution under Article
IV4(b)(i) and (b)(ii) by the earlier of December 31 of the calendar year in
which the life expectancy distributions must begin under Article IV-4(b)(ii)
or December 31 of the calendar year which contains the fifth anniversary of
the date of the Depositor's death.
3. Unless otherwise agreed upon, investments in this account are limited to
mutual fund shares of the Custodian.
IRS Form 5305-A
<PAGE>
PARNASSUS INDIVIDUAL RETIREMENT ACCOUNT
ADOPTION AGREEMENT FORM
- --------------------------------------------------------------------------------
I desire to establish a Parnassus IRA with Union Bank of California as custodian
as described in Section 408(a) of the Internal Revenue Code of 1954, as amended,
to provide for my retirement and for the support of my beneficiary(ies) in the
event of my death.
PARTICIPANT
INFORMATION ________________________________________________________________
FIRST NAME MIDDLE LAST NAME
________________________________________________________________
ADDRESS
________________________________________________________________
CITY / STATE / ZIP
_______________________ ____________________________________
DAYTIME TELEPHONE EVENING TELEPHONE
O MARRIED O NOT MARRIED
_____________ ______________________ _________________________
DATE OF BIRTH SOCIAL SECURITY NUMBER MARITAL STATUS
________________________________________________________________
EMPLOYER
________________________________________________________________
EMPLOYER ADDRESS
Minimum new account $500.00
TYPE OF IRA o Traditional IRA (maximum $2,000 per year contribution)
o SEP-IRA (Please provide the following information)
______________________________________ _____________________
EMPLOYER TELEPHONE
________________________________________________________________
EMPLOYER ADDRESS
________________________________________________________________
CITY/STATE/ZIP
__________________________________ __________________________
EMPLOYER TAX IDENTIFICATION NUMBER YOUR POSITION
IRA TRANSFER o Transfer (Attach the Transfer Authorization Letter and
indicate investment selections. Refer to page 19.)
ROLLOVER IRA o Rollover IRA from another IRA (Identify the source of
the Rollover)
________________________________________________________________
SOURCE OF ROLLOVER
________________________________________________________________
(UPON SIGNING THIS AGREEMENT, THE PARTICIPANT CERTIFIES THAT THE
CONTRIBUTION IS ELIGIBLE FOR ROLLOVER TREATMENT.)
Turn page for continuation of this agreement.
<PAGE>
DIRECT ROLLOVER o Direct Rollover from a Qualified Retirement Plan or 403(b)
account. (Identify the source of the Direct Rollover,
including address of the custodian)
________________________________________________________________
SOURCE OF DIRECT ROLLOVER / CUSTODIAN (OLD)
_________________________________ ________________________
ADDRESS TELEPHONE
INVESTMENT Please invest my IRA contribution as follows:
SELECTION
The Parnassus Fund: $__________ For Tax Year: 19___
The Parnassus Income Trust:
Equity Income Fund $__________
Fixed-Income Fund $__________
Total Investment: $__________
AUTOMATIC o Please withdraw $____ from my bank account on the o3rd o18th
INVESTMENT PLAN (check one) day of the month and invest it in my account
at the Fund. I want this done o monthly o quarterly
(check one). There is a $50 minimum. Automatic investments
should not exceed the $2,000 IRA contribution limit. All
contributions will be applied to the current calendar year.
Please indicate the type of account below by writing in the
account number. Then, print the name, address and telephone
number of your financial institution in the space provided.
_________________________________ _________________________
CHECKING ACCOUNT # SAVINGS ACCOUNT #
_________________________________ _________________________
NAME OF FINANCIAL INSTITUTION TELEPHONE
______________________________________________________________
ADDRESS
______________________________________________________________
CITY/STATE/ZIP
If investing in more than one Fund, designate the Fund in
which you wish to make your automatic investments.
______________________________________________________________
Important: Attach a voided personal check or savings deposit
slip to this application.
Financial Institution Authorization: I hereby authorize
Parnassus to make debit entries to my account at the
institution named above for the purpose of purchasing
additional shares for the Fund account.
______________________________________________________________
ACCOUNTHOLDER SIGNATURE
Turn page for continuation of this agreement.
<PAGE>
STATEMENT OF Rules governing the Statement of Intention are explained
INTENTION in the prospectus and, in more detail, in the Statement
(LETTER OF INTENT) of Additional Information. Fill this out only if you
intend to make additional investments over the next 13
months.
o Although I am not obliged to do so, it is my intention
to invest over a 13 month period the following amount in
shares of the Fund (including this investment).
o $15,000 o $25,000 o $50,000 o $100,000
o $250,000 o $500,000 o $1,000,000
RIGHTS OF I am a Parnassus shareholder and qualify for a reduced
ACCUMULATION sales charge based on the current total value of my
related Parnassus account(s) plus today's investment.
Related Accounts:
________________________ ______________________________
ACCOUNT # ACCOUNT NAME
________________________ ______________________________
ACCOUNT # ACCOUNT NAME
TELEPHONE I authorize the Fund, its transfer agent and principal
TRANSFERS underwriter to honor telephone instructions believed to be
genuine to transfer shares for my IRA account(s).
Telephone transfers must be between accounts with
identical registration. I agree that neither the Fund(s)
nor any of its agents, affiliates and employees will be
liable for any loss or damage for acting in good faith
upon telephone instructions.
o Yes o No
AGREEMENT I certify that the social security number indicated on
this form is correct and that I am not subject to backup
withholding according to IRS regulations. (Note: Cross out
previous sentence if it is incorrect.) I acknowledge
having received and read the IRA disclosure statement and
the prospectus of The Parnassus Fund and/or The Parnassus
Income Trust. I understand there is a custodian fee of $15
per year. I also understand that I am entitled to revoke
this IRA plan within seven (7) days from today and receive
back my entire contribution without reduction for fees,
commissions or other expenses.
_______________________________________ _______________
ACCOUNTHOLDER SIGNATURE DATE
- --------------------------------------------------------------------------------
For Dealer Use We hereby authorize Parnassus Investments to act as our
Only agent in connection with this transaction and agree to
notify the distributor of any purchase made under a
Statement of Intention or Rights of Accumulation.
_________________ _________________________________
INVESTMENT DEALER REGISTERED REPRESENTATIVE (PRINT)
BY:__________________ _________________________________
(AUTHORIZED SIGNATURE) ADDRESS OF BRANCH OFFICE
_____________________ _________________________________
BRANCH NUMBER CITY / STATE / ZIP
_____________________ _________________________________
REPRESENTATIVE NUMBER TELEPHONE
Turn page for designation of beneficiary.
<PAGE>
PARNASSUS IRA DESIGNATION OF BENEFICIARY
- --------------------------------------------------------------------------------
Individual Retirement Account of _______________________________________________
Any previous designation of death beneficiary is hereby revoked. I hereby
designate the person(s) named below as beneficiary(ies) to receive on my death
the value of the above IRA account. The sole survivor shall receive the entire
balance. No contingent beneficiary has any interest in my account unless all
primary beneficiaries predecease me. If no named beneficiary survives me, my
estate shall be my beneficiary. I reserve the right to change my
beneficiary(ies) at any time.
PRIMARY The balance of the Account shall be distributed to such of
BENEFICIARY OR the following persons as survive the Participant and the
BENEFICIARIES date of distribution in the percentages indicated.
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
ALTERNATIVE If none of the persons named above as "Primary Beneficiary or
BENEFICIARY OR Beneficiaries" survives the Participant and the date of
BENEFICIARIES distribution, the balance of the account shall be distributed
to such of the following persons as survive the Participant and
the date of distribution in the percentages indicated.
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
In the event that no named beneficiary survives the Participant
and the date of distribution, the Account shall be distributed
in a single payment to the estate of the Participant.
__________________________________________ _________________
SIGNATURE OF PARTICIPANT DATE
_______________________________________________________________
ADDRESS
If the participant is married and names as Primary Beneficiary
any person other than, or in addition to, his or her spouse,
written consent of the spouse is required below. It must be
notarized.
___________________ ________________
SIGNATURE OF SPOUSE NOTARY SIGNATURE
____________________________________________
DATE NOTARY SEAL
<PAGE>
PARNASSUS IRA TRANSFER AUTHORIZATION LETTER
- --------------------------------------------------------------------------------
Use this form to transfer all or part of your existing IRA to The Parnassus
Individual Retirement Account.
TO: _______________________________________________________________
PRESENT TRUSTEE / CUSTODIAN
_______________________________________________________________
ADDRESS
________________________________ ______________________
CITY / STATE / ZIP TELEPHONE
RE: _______________________________________________________________
NAME OF PLAN OR FUND
________________________________ ______________________
ACCOUNT NUMBER SOCIAL SECURITY NUMBER
FROM: _______________________________________________________________
NAME ON YOUR ACCOUNT
_______________________________________________________________
YOUR ADDRESS
_______________________________________________________________
CITY / STATE / ZIP
Dear Current Trustee/Custodian:
Please convert to cash, assets held by you in the qualified
retirement account identified above and o transfer o rollover
these funds as indicated.
<TABLE>
<CAPTION>
Quantity Quantity to Liquidate Transfer
Asset Description/Account Type in IRA be Transferred Immediately at Maturity
<S> <C> <C> <C> <C>
______________________________ ________ ______________ o o
______________________________ ________ ______________ o o
______________________________ ________ ______________ o o
</TABLE>
This transfer will (check one) o completely o partially close
my IRA.
I am aware that penalties may be incurred if time deposits are
liquidated prior to their maturity date.
AGE 70 1/2 The following transfer restrictions apply to this transaction:
RESTRICTIONS 1. Required Minimum Distribution. I authorize the Custodian or
Trustee named above (Select one option.)
o to distribute my required minimum distribution to me prior
to transferring my IRA assets.
Complete if you o to segregate and retain my required minimum distribution
will be age amount.
70 1/2 or older 2. Required Elections. (Complete only if you have reached your
in the transfer required beginning date, i.e., April 1 following the year in
year. which you turn age 70 1/2.)
a. My oldest primary beneficiary with respect to the
transferring IRA is
_________________ ________________ ____________
NAME DATE OF BIRTH RELATIONSHIP
b. My life expectancy o is o is not being recalculated.
c. The life expectancy of my spouse beneficiary o is o is
not being recalculated. o Not Applicable. I am aware that
the elections indicated above become irrevocable as of my
required beginning date and will apply to the IRA with
the Custodian or Trustee indicated below.
Turn page for continuation of this agreement.
<PAGE>
INVESTMENT
INSTRUCTIONS Please invest the proceeds of this transfer as follows:
The Parnassus Fund ________%
The Parnassus Income Trust
Equity Income Fund ________%
Fixed-Income Fund ________%
Total 100 %
--------
SIGNATURE _________________________________ ____________________
ACCOUNTHOLDER SIGNATURE DATE
- --------------------------------------------------------------------------------
For Parnassus To: Custodian or Trustee named above:
Investments Use
Only Parnassus is authorized to accept the above mentioned
account on behalf of Union Bank of California. Union Bank of
California accepts its appointment as Custodian for the
transfer/rollover described above. Direct any questions to
Parnassus Investments at One Market-Steuart Tower #1600,
San Francisco, California 94105, (415) 778-0200.
Acceptance for Union Bank of California by authorized
Parnassus Representative:
______________________________________ ____________________
AUTHORIZED SIGNATURE DATE
_____________________________________________________________
PRINT NAME AND TITLE
<PAGE>
PARNASSUS IRA WITHDRAWAL STATEMENT
- --------------------------------------------------------------------------------
GENERAL
INFORMATION _____________________________________________________________
ACCOUNT NUMBER
_______________________________ _________________________
NAME DATE OF BIRTH
_______________________________ _________________________
ADDRESS SOCIAL SECURITY NUMBER
_______________________________ _________________________
CITY / STATE / ZIP TELEPHONE
Complete the _______________________________ _________________________
following only BENEFICIARY'S NAME RELATIONSHIP
if you are a _______________________________ _________________________
Beneficiary ADDRESS DATE OF BIRTH
_______________________________ _________________________
CITY / STATE / ZIP SOCIAL SECURITY NUMBER
DISTRIBUTION I direct the Custodian or Trustee to make a distribution from
REASON the above account for the following reason:
o 1. Early Distribution (Accountholder under age 59 1/2, not
disabled and subject to the early distribution penalty)
o 2. Early Distribution (Accountholder under age 59 1/2 with
exception).
o 3. Permanent Disability (Accountholder disabled within the
meaning of section 72(m)(7) of the Internal Revenue
Code)
o 4. Death (Beneficiary of this account who furnishes a
certified copy of the Death Certificate)
o 5. Transfer (Including Transfer Incident To Divorce)
Payable to __________________________________________
o 6. Section 1035 Exchange (Tax free exchange of Insurance
contracts within the meaning of Section 1035)
o 7. Normal Distribution. For which tax year is the
distribution being taken? 19_____ .
o 8. Removal of Excess Contribution. Was the contribution
made in prior year? o Yes o No
If "no," use code 8. If "yes," is the contribution
being removed prior to the tax return due date of the
year for which the contribution was made? o Yes (Use
code P.) o No (Use code 8.)
DISTRIBUTION I instruct the Custodian or Trustee to distribute from the
AMOUNT above account: (Check one.)
o 1. The entire account balance
o 2. $ ______________________ (fill in amount requested)
o 3. Special Instructions: _________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
Turn page for continuation of this agreement.
<PAGE>
WITHHOLDING Please see the Withholding Notice Information. Complete for
ELECTION any distribution, except a transfer. Check one.
o 1. Withhold Federal income tax of __________(not less than
10 percent) from the amount withdrawn.
o 2. Effective ______________________________ , I elect not
to have Federal income tax withheld. I understand that
I am still liable for the payment of federal income tax
on the amount received. I also understand that I may be
subject to federal income tax penalties under the
estimated tax payment rules if my payments of the
estimated tax and withholding are insufficient.
SIGNATURES I certify that I am the proper party to receive payment(s)
from this IRA and that all information provided by me is true
and accurate. I further certify that no tax advice has been
given to me by the Custodian or Trustee. All decisions
regarding this withdrawal are my own. I expressly assume the
responsibility for any adverse consequences which may arise
from this withdrawal and I agree that the Custodian or Trustee
shall in no way be held responsible.
___________________________________________ _______________
ACCOUNTHOLDER OR BENEFICIARY DATE
___________________________________________ _______________
AUTHORIZED SIGNATURE - CUSTODIAN OR TRUSTEE DATE
<PAGE>
THE PARNASSUS
IRA
One Market-Steuart Tower #1600
San Francisco, California 94105
800-999-3505
415-778-0200
<PAGE>
THE PARNASSUS ROTH IRA
INFORMATION & APPLICATION
================================================================================
What You Should Know
What is a ROTH IRA? A ROTH IRA is an Individual Retirement Account that
allows you to put away money for your retirement and have the earnings be
tax-exempt. Contributions to the account are not tax-deductible, however, after
meeting certain age and time requirements, redemptions of both principal and
earnings are totally tax-free.
Are there different types of ROTH IRA's? If you have earned income and meet
certain requirements you may establish a ROTH IRA to receive annual
contributions. See Contributory ROTH IRA for a complete description. You may
want to establish a Contributory ROTH IRA if you are a nonworking individual who
has a spouse who has earned income. See Spousal ROTH IRA. You may also establish
a ROTH IRA to receive rollover contributions. See Rollover ROTH IRA.
Contributory ROTH IRA
Who can open a Contributory ROTH IRA? Anyone who earns wages or a salary
(even if self-employed) can open and contribute to a ROTH IRA - there are no age
limits as with a Traditional IRA. If you are married and file a joint return,
you can both open a Parnassus ROTH IRA even though your spouse has no earned
income. You may contribute to a ROTH IRA even though you are an active
participant in an employer-sponsored retirement plan, a government retirement
plan, the social security system or the railroad retirement system, or are
receiving any type of retirement benefits.
How much can I contribute to a ROTH IRA? You can put up to $2,000 a year
into your ROTH IRA but not more than you earn for the year. If you are married,
both you and your spouse can contribute up to $2,000 each, but no more than your
combined earned income for the year. The annual $2,000 limit is reduced by any
contribution made to a Traditional Contributory IRA. Also, contributions to a
ROTH IRA are phased out based on your adjusted gross income (AGI) for the
taxable year as follows:
Married Taxpayers Married Taxpayers
Filing Jointly Single Taxpayers Filing Separately
$150,000 - $160,000 $95,000 - $110,000 $0 - $10,000
<PAGE>
Earned income is considered:
o All wages and salary you earn from employment;
o Income from tips, professional fees, bonuses, and commissions;
o Money earned as sole proprietor or partner for personal services
rendered; and
o Alimony which you report on your taxes.
Earned income does not include:
o Money you receive from pensions, annuities or other types of deferred
compensation; and
o Earnings on investments, interest, dividends or rental income, and
proceeds from the sale of investments.
Spousal ROTH IRA
What is a Spousal ROTH IRA? Spousal ROTH IRA contributions are made for
individuals who are married and have no earned income or very little earned
income (referred to as "noncompensated spouses"), who would not be able to make
a substantial IRA contribution based on their own income. To be eligible to
contribute to a Spousal ROTH IRA, the following requirements must be met:
o The couple must be married;
o One spouse must have compensation or earned income;
o A ROTH IRA must be established for the noncompensated spouse.
The combined yearly spousal contribution limit for both spouses is the
lesser of $4,000 or the couple's combined earned income.
<PAGE>
Rollover ROTH IRA
What is a Rollover ROTH IRA? There are two types of Rollover ROTH IRA's --
ROTH IRA to ROTH IRA and Traditional IRA to ROTH IRA. There is no yearly limit
on the amount that may be put into a Rollover ROTH IRA.
A ROTH IRA may not be rolled over to a Traditional IRA. Also, balances in
an employer's qualified retirement plan may not be rolled over into a ROTH IRA.
ROTH IRA to ROTH IRA Rollover -- This transaction involves a distribution
from one ROTH IRA and a subsequent purchase of another ROTH IRA. The entire
transaction must take place within 60 days and you are allowed to make a ROTH
IRA to ROTH IRA rollover only once in any 12-month period.
Traditional IRA to ROTH IRA Rollover -- An IRA holder may roll over
(convert) their Traditional IRA to a ROTH IRA. The 60-day rule does apply,
however, the rule allowing only one rollover per 12-month period does not. You
cannot make a Traditional IRA to ROTH IRA rollover if:
o your Adjusted Gross Income for the taxable year exceeds $100,000, or
o you are married, but file separate income tax returns.
IMPORTANT NOTE: The IRA holder must pay tax on all pre-tax dollars distributed
from the Traditional IRA.
If this rollover takes place during 1998, the IRA holder may spread the tax
burden ratably over a four-year period. There would be no 10 percent early
distribution penalty if the IRA holder is under 59 1/2. Converted Traditional
IRA amounts must be accounted for separately until the ROTH IRA has been
established for five years.
An individual cannot roll over a qualified retirement plan or 403(b) plan
distribution to a ROTH IRA. However, an individual can roll from a qualified
plan to a Traditional IRA and then roll (convert) the amounts in the Traditional
IRA into a ROTH IRA.
Can I transfer my ROTH IRA? Transfers of cash or Parnassus shares can be
made from one ROTH IRA to another ROTH IRA. You must instruct the current
custodian to transfer the ROTH IRA funds to the new trustee or custodian. As
long as none of the funds are distributed to you, and the transfer is made
directly between custodians or trustees, the transfer will not be classified as
a distribution and no government reporting will be done by Parnassus. There is
no limit on the number of times a ROTH IRA can be transferred.
If I cannot take a deduction for my ROTH IRA contribution, why should I
contribute? The greatest benefit of a ROTH IRA is that all earnings will be
tax-free upon distribution. This can make a big difference. The longer the
contribution is in the IRA and the more it earns, the bigger the benefit. Also,
consider the goal of an IRA which is to provide enough money to live comfortably
during retirement. By making regular contributions to an IRA, you can provide
for that comfortable retirement.
<PAGE>
When can I withdraw? You can withdraw from your ROTH IRA at any time, but
withdrawals of earnings that do not meet certain criteria (i.e., a non-qualified
distribution) would be taxed and may incur a 10% distribution penalty.
What is a Qualified Distribution? A distribution of assets from a ROTH IRA
may be taken tax free for qualified distributions. A qualified distribution is a
distribution of assets that are held in a ROTH IRA for at least five taxable
years (beginning with the first taxable year for which the ROTH IRA holder made
a contribution) and one of the following events occurs:
o attainment of age 59 1/2,
o disability,
o the purchase of a first home, or
o death.
What is a Non-Qualified Distribution? When an IRA holder takes a
distribution from their ROTH IRA, the basis in the ROTH IRA (the amount that was
already taxed) is distributed first and is tax and penalty-free. Once the basis
is distributed, the earnings are distributed. If the distribution is not a
qualified distribution, any earnings distributed would be subject to taxes and,
unless the ROTH IRA holder meets an exception, subject to the 10 percent early
distribution penalty. However, non-qualified distributions of earnings will,
apparently, be penalty-free (but still taxable) if the ROTH IRA holder meets any
one of the IRC Sec.72(t) exceptions to the 10 percent early distribution penalty
(i.e., death, disability, substantially equal periodic payments, attainment of
age 59 1/2, education expenses, first time homebuyer expenses, health insurance
and medical expenses).
Tax Questions About ROTH IRA's? The customer representatives at Parnassus
are happy to help you with your questions about IRA's, however, neither
Parnassus Investments nor Union Bank of California (custodian) is responsible
for determining or maintaining records regarding your eligibility for tax
benefits. You may want to contact a qualified tax professional before opening a
ROTH IRA. For more information, you may contact your local office of the
Internal Revenue Service. For more detailed information request IRS Publication
590, Individual Retirement Arrangements, by calling the IRS at 1-800-TAX-FORM.
<PAGE>
What investment options do I have? Parnassus offers three socially
responsible investment alternatives for your ROTH IRA. Your retirement funds can
be invested in one or any combination of the following:
The Parnassus Fund
The Parnassus Fund's investment objective is long-term growth.
Since the Fund seeks growth of capital, investors assume a
moderate amount of risk. All investments in The Parnassus Fund
are subject to a sales charge (maximum 3.5%).
The Parnassus Income Trust
The Parnassus Income Trust's investment objective is current
income and capital preservation or capital appreciation. The
Income Trust is more conservative and assumes less risk than
The Parnassus Fund. The Parnassus Income Trust offers two
funds for IRA investments:
The Equity Income Fund invests in stocks and convertible
stocks and bonds. Its objectives are both current income and
capital appreciation.
The Fixed-Income Fund invests in bonds and other fixed-income
securities. Its objective is a high level of current income
consistent with safety and capital preservation.
Under normal circumstances, the Fixed-Income Fund will have
the highest yield. While the yield of the Equity Income Fund
will normally be somewhat lower than the yield of the
Fixed-Income Fund, the Equity Income Fund has the potential to
provide capital appreciation since it invests in stocks. There
is no sales charge for either fund of the Parnassus Income
Trust.
Our investment selections provide you with a flexible retirement savings
program that can easily be tailored to your changing investment objectives or
changing market conditions. For more detailed information, please refer to the
prospectus for the Fund you are interested in.
Can I make contributions to my ROTH IRA automatically? Yes. Parnassus
offers automatic investment plans. You may arrange to have contributions of $50
or more automatically deducted from your checking or savings account and
invested in your ROTH IRA. All automatic contributions are considered
contributions for the current tax year. When setting up your investment plan,
make sure not to exceed your $2,000 contribution limit.
Are there any special fees? There is a custodial fee of $15.00 a year for
maintaining the IRA. There is also a sales charge (maximum of 3.5%) on
investments in the Parnassus Fund. There is no sales charge for investments in
the Parnassus Income Fund. If you decide to have more than one IRA account, we
will only charge you one custodial fee.
<PAGE>
How do I open an account? First, read the Parnassus Fund or the Parnassus
Income Trust prospectus that preceded or accompanied this brochure. Use that
information to determine which investment option is right for you. Also read the
Disclosure Statement contained in this brochure. Then fill out and sign the IRA
Adoption Agreement and Beneficiary Form. Finally, mail your completed forms
along with a check in the amount of your initial investment, a minimum of $500,
to: Parnassus Investments, One Market-Steuart Tower #1600, San Francisco, CA
94105.
Want more information? Call Parnassus at 800-999-3505. If you have
questions about whether a ROTH IRA is appropriate for you or about personal tax
consequences of a contribution to any type of IRA, you should contact the
Internal Revenue Service or consult a tax adviser.
Instructions For Opening A Parnassus IRA
1. Read The Parnassus Fund or The Parnassus Income Trust prospectus carefully
before making an investment. Also, be sure to read the Disclosure Statement
in this brochure; it covers some very important information on the
Parnassus ROTH IRA. If you have any questions about the tax consequences of
setting up a ROTH IRA, you should consult a tax adviser.
2. Fill out and sign the Parnassus ROTH IRA Adoption Agreement Form and
Designation of Beneficiary Form. Be sure to designate whether your purchase
is for a Contributory ROTH IRA or a Rollover ROTH IRA. If you are opening
both a regular and spousal ROTH IRA, you must fill out two separate
Agreements.
3. Make your check out to The Parnassus Fund or The Parnassus Income Trust and
send it with all the forms to: Parnassus, One Market-Steuart Tower #1600,
San Francisco, California 94105.
Union Bank of California will act as custodian of your account, however, do
not send any correspondence or transaction requests to Union Bank (including
transfer requests) as the accounts are maintained at Parnassus. Parnassus
Investments will send you a confirmation that your money has been received and
that the IRA has been established.
<PAGE>
THE PARNASSUS ROTH INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
General
Your ROTH Individual Retirement Account (ROTH IRA) is a custodial account
for the benefit of you or your beneficiaries. The custodian of the ROTH IRA is
named on the ROTH IRA Adoption Agreement Form.
Internal Revenue Service (IRS) regulations require that you be given this
Disclosure Statement to assure that you are made aware of some of the statutory
rules governing a ROTH IRA.
Because the rules with respect to IRA's are very complex and because
misunderstanding or disregarding the rules may have serious tax implications,
you should consult your own tax advisor if you have questions about the
information contained in this disclosure statement. Further information can also
be obtained from any district office of the Internal Revenue Service.
When you sign the ROTH IRA Adoption Agreement, you agree to the terms and
conditions described in this booklet, including this Disclosure Statement and
the Custodial Agreement.
Right to Revoke
You may revoke your ROTH IRA at any time within seven (7) calendar days
after you signed the ROTH IRA Adoption Agreement. You may not revoke a
contribution made to an existing ROTH IRA.
To revoke the ROTH IRA, mail or deliver a written notice of revocation to:
Parnassus Investments
One Market - Steuart Tower #1600
San Francisco, CA 94105
We cannot accept a verbal notice of revocation. However, if you have any
questions about revoking your ROTH IRA you may call us at 800-999-3505 or in the
San Francisco Bay Area 415-778-0200. When we receive your written revocation, we
will return the entire amount you deposited. Any amount earned on the account is
forfeited and the revocation is reported to the IRS.
If you mail the notice, we consider it mailed on the date postmarked
(provided it is mailed first class, postage prepaid and properly addressed) or,
if by certified or registered mail, the date of certification or registration.
You may also send the revocation via a delivery service using overnight or
two-day service.
The ROTH IRA
Union Bank of California is the custodian of ROTH IRA accounts invested
directly with Parnassus Investments, however, all ROTH IRA requests must be sent
to Parnassus at One Market- Steuart Tower #1600, San Francisco, CA 94105.
Contributions (other than rollover contributions) in any taxable year, must be
in cash and may not exceed the lesser of 100% of your earned income or $2,000.
Your income tax filing deadline, not including extensions, is the deadline for
making contributions for a prior year. You are not permitted to make a
contribution for a prior year after your tax filing deadline, usually April 15,
even if you have obtained an extension for filing your personal tax return.
All of your contributions will be held in the name of Union Bank of
California as Custodian for your benefit, and will be invested as you direct us.
These accounts may not be set up as "joint tenancy" accounts or for the benefit
of someone other than the participant until after the participant's death. Your
interest in the assets of your ROTH IRA cannot be given away or pledged. Such
action may be considered an IRA distribution and trigger any applicable tax or
penalty consequences.
Contributory ROTH IRA
You may establish a Contributory ROTH IRA if you have earned income even
though you have attained the age of 70 1/2. If you or your spouse work, you may
each establish your own Contributory ROTH IRA and contribute the lesser of
$2,000 or 100% of your earned income for that year to each IRA.
However, the annual $2,000 limit is reduced by any contribution made to a
Regular Contributory IRA. Also, contributions to a ROTH IRA are phased out based
on your adjusted gross income (AGI) for the taxable year as follows:
Married Taxpayers Married Taxpayers
Filing Jointly Single Taxpayers Filing Separately
$150,000-$160,000 $95,000-$110,000 $0-$10,000
Earned income is considered:
o All wages and salary you earn from employment;
o Income from tips, professional fees, bonuses, and commissions;
o Money earned as sole proprietor or partner for personal services rendered;
and
o Alimony which you report on your taxes.
Earned income does not include:
o Money you receive from pensions, annuities or other types of deferred
compensation; and
o Earnings on investments, interest, dividends or rental income, and proceeds
from the sale of investments.
You may contribute to a ROTH IRA even if you are an active participant in an
employer sponsored retirement plan, a government retirement plan, the social
security system, or the railroad retirement system or are receiving any type of
retirement benefits.
Spousal ROTH IRA
Spousal ROTH IRA contributions are made for married individuals who have no
earned income or very little earned income (referred to as "noncompensated
spouses"), who would not be able to make a substantial IRA contribution based on
their own income. To be eligible to establish a Spousal ROTH IRA the following
requirements must be met:
o The couple must be married;
o One spouse must have compensation or earned income;
o A ROTH IRA must be established for the noncompensated spouse.
If these eligibility rules are met, a contribution can be made.
The combined spousal contribution limit is the lesser of $4,000 or the
couple's combined earned income. For the compensated spouse the contribution is
the lesser of $2,000 or 100% of his or her earned income. If the eligibility
rules are met, the noncompensated spouse may receive a contribution of the
lesser of $2,000 or the combined compensation of both spouses, reduced by the
IRA contribution of the compensated spouse.
Tax Treatment of Contributions
No income tax deduction is allowed for a contribution to a ROTH IRA.
Rollover ROTH IRA
A Rollover ROTH IRA contribution may exceed the $2,000 contribution limit.
There are two types of Rollover ROTH IRA's; "ROTH IRA to ROTH IRA" and
"Traditional IRA to ROTH IRA". A ROTH IRA may not be rolled over to a Regular
IRA. Also, rollover to a ROTH IRA from an employer's qualified retirement plan
is not allowed.
ROTH IRA to ROTH IRA Rollover -- In order for the rollover to be effective,
you must complete it within 60 days after the day you receive the distribution
from the original ROTH IRA. You are allowed to make a ROTH IRA to ROTH IRA
Rollover only once in any 12-month period. Each ROTH IRA Plan (not each account
under the ROTH IRA) is treated separately when applying the 12-month rule.
Therefore, you can take one rollover distribution from each of your ROTH IRA
Plans (not each account under the ROTH IRA) per 12-month period. This
restriction is on the distributing ROTH IRA and not the receiving ROTH IRA,
(i.e., the same ROTH IRA could receive two ROTH IRA to ROTH IRA rollover
contributions in the same 12-month period so long as the two rollover
contributions came from different ROTH IRA plans.)
Traditional IRA to ROTH IRA Rollover -- If you roll over your Regular IRA
to a ROTH IRA, that rollover is disregarded for purposes of the rule allowing
only one rollover in a 12-month period. However, the 60-day rule does apply. You
can not make a Traditional IRA to ROTH IRA rollover if (a) your AGI for the
taxable year exceeds $100,000, or (b) you are married, but file a separate
income tax return. The IRA holder must pay tax on all pre-tax dollars
distributed from the Traditional IRA. If you meet the eligibility rules and
convert your Traditional IRA to a ROTH IRA prior to January 1, 1999 any amount
required to be included in your gross income can be taken into income ratably
over four years. If you are under age 59 1/2 the 10 percent early distribution
penalty tax will not apply.
ROTH IRA Investments
You may direct your ROTH IRA contributions to any one or more of the
following mutual funds: The Parnassus Fund or The Parnassus Income Trust (Equity
Income or Fixed-Income Funds).
Tax Questions About ROTH IRA's
Neither Parnassus Investments nor Union Bank of California is responsible
for determining or maintaining records regarding your eligibility for tax
benefits. You may want to contact a qualified tax professional before opening a
ROTH IRA. For more information you may contact your local office of the Internal
Revenue Service (IRS). For more detailed information request IRA Publication
590, Individual Retirement Arrangements, by calling the IRS at 1-800-TAX-FORM.
Distributions
There are two types of distributions from a ROTH IRA, a "Qualified
Distribution" and a "Non- Qualified Distribution."
Qualified Distribution -- A Qualified Distribution is not included in your
gross income and is not subject to the additional 10% early withdrawal penalty
tax. A Qualified Distribution may be made after a five-taxable-year period
beginning with the first taxable year for which you made a contribution to your
ROTH IRA and meet one of the following:
o made on or after you reach age 59 1/2;
o made on account of death or disability as defined in IRC Sec. 72(m); or
o made as a qualified first-time homebuyer distribution.
Definitions
Five years in the ROTH IRA -- To satisfy the 5-year rule, a qualified
distribution may not be taken before the end of the five-tax-year period
beginning with the first tax year for which you (or your spouse) made a
contribution to the ROTH IRA. Because contributions for a prior tax year can
be made until your tax filing deadline (usually April 15) the five-year
holding period begins to run with the year to which the contribution
relates, not the year in which the contribution is actually made.
Disability - IRC Sec. 72(m) -- the person must provide written proof that he
or she is unable to engage in any substantial gainful activity by reason 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.
First-Time Homebuyer -- In order to be considered a first-time homebuyer,
you (and your spouse if married) must not have had an ownership interest in
a principal residence during a two-year period ending on the date that the
new home is acquired.
Qualified First-Time Homebuyer Distribution -- Qualified first-time
homebuyer distributions are withdrawals of up to $10,000 during your
lifetime that are used within 120 days of withdrawal to buy, build or
rebuild a "first" home that will be the principal residence for you, your
spouse, any child, grandchild, or ancestor of yours or your spouse. (Note:
If there is a delay or cancellation of the purchase or construction of the
first home, the amount of the distribution may be contributed back into a
ROTH IRA within 120 days of receipt.
Non-Qualified Distribution -- If you receive a distribution prior to one of
the events listed above, the distribution is treated as made from
contributions first. Therefore, no portion of the distribution is treated as
taxable until the total of all distributions from the ROTH IRA exceed the
amount of contributions made to the ROTH IRA. At that time normal income tax
and the 10-percent premature distribution penalty tax would apply to the
taxable portion of the distribution.
Excess Contribution Withdrawal
A contribution made to a ROTH IRA is an excess contribution if the
contribution exceeds the individual's allowable contribution amount. The excess
amount must be corrected. The portion of the contribution that is in excess will
be assessed a 6% nondeductible excise tax (IRC Sec. 4973). This tax is payable
by you for each year the excess is permitted to remain in the IRA. However, you
may avoid the penalty if the excess contribution and all earnings, are removed
from the IRA before the due date for filing the federal income tax return,
including extensions, for the year for which the excess contribution was made.
Trustee-to-Trustee
Transfers of cash or Parnassus shares can be made from one ROTH IRA to
another ROTH IRA. The current custodian will transfer the ROTH IRA funds to the
new trustee or custodian. As long as none of the funds is distributed to you,
and the transfer is made directly between custodians or trustees, the transfer
will not be classified as a distribution and no government reporting will be
done by Parnassus.
If you wish to transfer ROTH IRA assets to Parnassus, we will need your
authorization to request that your ROTH IRA be liquidated and transferred (or
transferred in kind) to us from your current trustee or custodian. We will ask
you to sign a ROTH IRA Transfer Authorization Letter and open a Parnassus ROTH
IRA account if you do not already have one.
If you choose to transfer your Parnassus ROTH IRA to another trustee or
custodian, Parnassus will required a Transfer Letter from the successor trustee
or custodian. The Transfer Letter must have your original signature giving us
authorization to transfer your ROTH IRA and the successor trustee's signature
and statement that they will accept your ROTH IRA into a ROTH IRA account you
have established with them.
Prohibited Transactions
Your IRA is exempt from tax unless you engage in a prohibited transaction.
A prohibited transaction is any improper use of your IRA. ROTH IRA account
holders are subject to the prohibited transaction rules, but not the penalty
tax, of Sec. 4975 of the IRC. Examples of prohibited transactions with a ROTH
IRA are as follows:
o Borrowing from it;
o Selling property to it or buying property from it;
o Receiving more than reasonable compensation for managing it; or
o Using it as security for a loan.
Reporting Requirements
Each year Parnassus will furnish you with a statement of account which will
give the amount of the contribution to the ROTH IRA, earnings accumulated,
distributions from the IRA and the total value of the ROTH IRA as of the end of
the year. Information relating to contributions and withdrawals must be reported
annually to the Internal Revenue Service by you.
If you withdrew $10 or more during the year, the distribution is reported
on IRS Form 1099-R by January 31 of the following year. A copy is supplied to
you.
IRS Form 5498 "Individual Retirement Arrangement Information" is prepared
annually for the previous calendar year and mailed to you by May 31 of the
following year. This report provides contribution and fair market value
information for you and the IRS.
IRS Approval of Plan's Format
This IRA Plan has been approved as to form by the Internal Revenue Service
(IRS). The IRS approval is a determination only as to the form of the ROTH IRA
and does not represent a determination of the merits of the ROTH IRA.
Fees
The fee for maintaining your ROTH IRA Plan is described in the IRA
Application and may be changed from time to time, as provided in the Custodial
Account Agreement.
Financial Information
The growth in the value of the mutual fund investments held in your
Parnassus ROTH IRA can neither be projected nor guaranteed. Growth in the value
of your Parnassus ROTH IRA will depend entirely on your investment selections.
The Fund(s) capital gains are distributed annually to shareholders. Dividends
and capital gain distributions will automatically be reinvested in additional
shares of the Fund(s). Please refer to The Parnassus Fund or The Parnassus
Income Trust prospectus for more detailed information.
<PAGE>
ADOPTION AGREEMENT
THE PARNASSUS ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
- --------------------------------------------------------------------------------
Article I
1. If this ROTH IRA is not designated as a ROTH CONVERSION IRA, then, except in
the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum
amount of $2,000 for any tax year of the participant.
2. If this ROTH IRA is designated as a ROTH CONVERSION IRA, no contributions
other than IRA Conversion Contributions will be accepted.
Article II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single participant, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married participant who files jointly, between AGI of $150,000 and
$160,000; and for a married participant who files separately, between $0 and
$10,000. In the case of a conversion, the custodian will not accept IRA
Conversion Contributions in a tax year if the participant's AGI for that tax
year exceeds $100,000 or if the participant is married and files a separate
return. Adjusted gross income is defined in section 408A(c)(3) and does not
include IRA Conversion Contributions.
Article III
The participant's interest in the balance in the custodial account is
nonforfeitable.
Article IV
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and
platinum coins, coins issued under the laws of any state, and certain
bullion.
Article V
1. If the participant dies before his or her entire interest is distributed to
him or her and the grantor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the participant or,
if the participant has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the participant's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of the
participant's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the
trust as of the close of business on December 31 of the preceding year by
the life expectancy of the designated beneficiary using the attained age of
the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent
year.
3. If the participant's spouse is the sole beneficiary on the participant's
date of death, such spouse will then be treated as the participant.
Article VI
1. The participant agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under sections 408(I) and
408A(d)(3)(E), Regulation sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The custodian agrees that Parnassus Investments will submit reports to the
Internal Revenue Service and the participant as prescribed by the Internal
Revenue Service.
Article VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the person whose signature appears on
the Account Adoption Agreement Form.
IRS Form 5305-RA
<PAGE>
PARNASSUS ROTH INDIVIDUAL RETIREMENT ACCOUNT
ADOPTION AGREEMENT FORM
- --------------------------------------------------------------------------------
I desire to establish a Parnassus ROTH IRA with Union Bank of California as
custodian as described in Section 408A of the Internal Revenue Code, as amended,
to provide for my retirement and for the support of my beneficiaries in the
event of my death.
PARTICIPANT
INFORMATION ________________________________________________________________
FIRST NAME MIDDLE LAST NAME
________________________________________________________________
ADDRESS
________________________________________________________________
CITY / STATE / ZIP
_______________________ ____________________________________
DAYTIME TELEPHONE EVENING TELEPHONE
O Married O Not Married
_____________ ___________________ _________________________
DATE OF BIRTH SOCIAL SECURITY NO. MARITAL STATUS
________________________________________________________________
EMPLOYER
________________________________________________________________
EMPLOYER ADDRESS
Minimum new account $500.00 Maximum contribution per year
$2,000.00
IRA TRANSFER o Transfer my ROTH IRA to a Parnassus ROTH IRA.
(Attach the Transfer/Rollover Authorization Letter and
indicate investment selections.)
ROLLOVER IRA o ROTH IRA to ROTH IRA. Enclose a check.
By signing this agreement the participant certifies that the
contribution is eligible for rollover treatment.
ROTH o Traditional IRA to ROTH IRA. (Conversion rollover)
CONVERSION IRA Select one of the following:
o Enclose a check.
o Attach the Transfer/Rollover Authorization Letter
o Convert my Parnassus Traditional IRA to a Parnassus
ROTH IRA
_______________________________ $________________________
ACCOUNT # AMOUNT TO ROLLOVER
INVESTMENT Please invest my ROTH IRA contribution as follows:
SELECTION
The Parnassus Fund: $__________ For Tax Year: 19___
The Parnassus Income Trust:
Equity Income Fund $__________
Fixed-Income Fund $__________
Total Investment: $__________
Turn page for continuation of this agreement.
<PAGE>
STATEMENT OF Rules governing the Statement of Intention are explained in
INTENTION (LETTER the prospectus and, in more detail, in the Statement of
OF INTENT) Additional Information. Fill this out only if you intend to
make additional investments over the next 13 months.
o Although I am not obliged to do so, it is my intention to
invest over a 13 month period the following amount in
shares of the Fund (including this investment).
o $15,000 o $25,000 o $50,000 o $100,000
o $250,000 o $500,000 o $1,000,000
RIGHTS OF I am a Parnassus shareholder and qualify for a reduced sales
ACCUMULATION charge based on the current total value of my related
Parnassus account(s) plus today's investment.
Related Accounts:
__________________________ ______________________________
ACCOUNT # ACCOUNT NAME
__________________________ ______________________________
ACCOUNT # ACCOUNT NAME
AUTOMATIC o Please withdraw $____ from my bank account on the o3rd o18th
INVESTMENT PLAN (check one) day of the month and invest it in my account
at the Fund. I want this done o monthly o quarterly
(check one). There is a $50 minimum. Automatic investments
should not exceed the $2,000 IRA contribution limit. All
contributions will be applied to the current calendar year.
Please indicate the type of account below by writing in the
account number. Then, print the name, address and telephone
number of your financial institution in the space provided.
_________________________________ _________________________
CHECKING ACCOUNT # SAVINGS ACCOUNT #
_________________________________ _________________________
NAME OF FINANCIAL INSTITUTION TELEPHONE
_________________________________ _________________________
ADDRESS CITY/STATE/ZIP
If investing in more than one Fund, designate the Fund in
which you wish to make your automatic investments.
______________________________________________________________
Important: Attach a voided personal check or savings deposit
slip to this application.
Financial Institution Authorization: I hereby authorize
Parnassus to make debit entries to my account at the
institution named above for the purpose of purchasing
additional shares for the Fund account.
______________________________________________________________
ACCOUNTHOLDER SIGNATURE
Turn page for continuation of this agreement.
<PAGE>
TELEPHONE I authorize the Fund, its transfer agent and principal
TRANSFERS underwriter to honor telephone instructions believed to be
genuine to transfer shares for my IRA account(s).
Telephone transfers must be between accounts with
identical registration. I agree that neither the Fund(s)
nor any of its agents, affiliates and employees will be
liable for any loss or damage for acting in good faith
upon telephone instructions.
o Yes o No
AGREEMENT I certify that the social security number indicated on
this form is correct and that I am not subject to backup
withholding according to IRS regulations. (Note: Cross out
previous sentence if it is incorrect.) I acknowledge
having received and read the ROTH IRA disclosure statement
and the prospectus of The Parnassus Fund and/or The
Parnassus Income Trust. I understand there is a custodian
fee of $15 per year. I also understand that I am entitled
to revoke this IRA plan within seven (7) days from today
and receive back my entire contribution without reduction
for fees, commissions or other expenses.
_______________________________________ _______________
ACCOUNTHOLDER SIGNATURE DATE
- --------------------------------------------------------------------------------
For Dealer Use We hereby authorize Parnassus Investments to act as our
Only agent in connection with this transaction and agree to
notify the distributor of any purchase made under a
Statement of Intention or Rights of Accumulation.
_________________ _________________________________
INVESTMENT DEALER REGISTERED REPRESENTATIVE (PRINT)
BY:__________________ _________________________________
(AUTHORIZED SIGNATURE) ADDRESS OF BRANCH OFFICE
_____________________ _________________________________
BRANCH NUMBER CITY / STATE / ZIP
_____________________ _________________________________
REPRESENTATIVE NUMBER TELEPHONE
Turn page for designation of beneficiary.
<PAGE>
PARNASSUS ROTH IRA DESIGNATION OF BENEFICIARY
- --------------------------------------------------------------------------------
ROTH Individual Retirement Account of __________________________________________
Any previous designation of death beneficiary is hereby revoked. I hereby
designate the person(s) named below as beneficiary(ies) to receive on my death
the value of the above IRA account. The sole survivor shall receive the entire
balance. No contingent beneficiary has any interest in my account unless all
primary beneficiaries predecease me. If no named beneficiary survives me, my
estate shall be my beneficiary. I reserve the right to change my
beneficiary(ies) at any time.
PRIMARY The balance of the Account shall be distributed to such of
BENEFICIARY OR the following persons as survive the Participant and the
BENEFICIARIES date of distribution in the percentages indicated.
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
ALTERNATIVE If none of the persons named above as "Primary Beneficiary or
BENEFICIARY OR Beneficiaries" survives the Participant and the date of
BENEFICIARIES distribution, the balance of the account shall be distributed
to such of the following persons as survive the Participant and
the date of distribution in the percentages indicated.
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
__________________________________________ _________________
NAME SOCIAL SECURITY #
_______________________________________________________________
ADDRESS
_____________ ___________________________ __________________
DATE OF BIRTH RELATIONSHIP TO PARTICIPANT % SHARE OF ACCOUNT
In the event that no named beneficiary survives the Participant
and the date of distribution, the Account shall be distributed
in a single payment to the estate of the Participant.
__________________________________________ _________________
SIGNATURE OF PARTICIPANT DATE
_______________________________________________________________
ADDRESS
If the participant is married and names as Primary Beneficiary
any person other than, or in addition to, his or her spouse,
written consent of the spouse is required below. It must be
notarized.
___________________ ________________
SIGNATURE OF SPOUSE NOTARY SIGNATURE
____________________________________________
DATE NOTARY SEAL
<PAGE>
PARNASSUS ROTH IRA TRANSFER/ROLLOVER AUTHORIZATION LETTER
- --------------------------------------------------------------------------------
Use this form to transfer all or part of your existing ROTH IRA to a Parnassus
ROTH IRA or to roll over your existing Traditional IRA to a ROTH IRA.
TO: _______________________________________________________________
PRESENT TRUSTEE / CUSTODIAN
_______________________________________________________________
ADDRESS
_______________________________________________________________
CITY / STATE / ZIP
RE: _______________________________________________________________
NAME OF PLAN OR FUND
________________________________ ______________________
ACCOUNT NUMBER SOCIAL SECURITY NUMBER
This account is currently a (check one) o Traditional IRA
(Rollover) o ROTH IRA (Transfer).
FROM: _______________________________________________________________
NAME ON YOUR ACCOUNT
_______________________________________________________________
YOUR ADDRESS
_______________________________________________________________
CITY / STATE / ZIP
Dear Current Trustee/Custodian:
Please convert to cash, assets held by you in the qualified
retirement account identified above and o transfer o rollover
these funds as indicated.
<TABLE>
<CAPTION>
Quantity Quantity to Liquidate Transfer
Asset Description/Account Type in IRA be Transferred Immediately at Maturity
<S> <C> <C> <C> <C>
______________________________ ________ ______________ o o
______________________________ ________ ______________ o o
______________________________ ________ ______________ o o
</TABLE>
This transfer will (check one) o completely o partially close
my IRA.
I am aware that penalties may be incurred if time deposits are
liquidated prior to their maturity date.
INVESTMENT
INSTRUCTIONS Please invest the proceeds of this transfer as follows:
The Parnassus Fund ________%
The Parnassus Income Trust
Equity Income Fund ________%
Fixed-Income Fund ________%
Total 100 %
--------
SIGNATURE _________________________________ ____________________
ACCOUNTHOLDER SIGNATURE DATE
<PAGE>
- --------------------------------------------------------------------------------
For Parnassus To: Custodian or Trustee named above:
Investments Use
Only Parnassus is authorized to accept the above mentioned
account on behalf of Union Bank of California. Union Bank of
California accepts its appointment as Custodian for the
transfer/rollover described above. Direct any questions to
Parnassus Investments at One Market-Steuart Tower #1600,
San Francisco, California 94105, (415) 778-0200.
Acceptance for Union Bank of California by authorized
Parnassus Representative:
______________________________________ ____________________
AUTHORIZED SIGNATURE DATE
_____________________________________________________________
PRINT NAME AND TITLE
<PAGE>
PARNASSUS ROTH IRA WITHDRAWAL STATEMENT
- --------------------------------------------------------------------------------
GENERAL
INFORMATION _____________________________________________________________
ACCOUNT NUMBER
_______________________________ _________________________
NAME DATE OF BIRTH
_______________________________ _________________________
ADDRESS SOCIAL SECURITY NUMBER
_______________________________ _________________________
CITY / STATE / ZIP TELEPHONE
Complete the _______________________________ _________________________
following only BENEFICIARY'S NAME RELATIONSHIP
if you are a _______________________________ _________________________
Beneficiary ADDRESS DATE OF BIRTH
_______________________________ _________________________
CITY / STATE / ZIP SOCIAL SECURITY NUMBER
DISTRIBUTION I direct the Custodian or Trustee to make a distribution from
REASON the above account for the following reason:
o 1. Early Distribution (Accountholder under age 59 1/2, not
disabled and subject to the early distribution penalty)
o 2. Early Distribution (Accountholder under age 59 1/2
taking substantially equal periodic payments)
o 3. Permanent Disability (Accountholder disabled within the
meaning of section 72(m)(7) of the Internal Revenue
Code)
o 4. Death (Beneficiary of this account who furnishes a
certified copy of the Death Certificate)
o 5. Transfer (Including Transfer Incident To Divorce)
Payable to __________________________________________
o 6. First time homebuyer
o 7. Normal Distribution. For which tax year is the
distribution being taken? 19_____ .
o 8. Removal of Excess Contribution. Was the contribution
made in prior year? o Yes o No
If "no," use code 8. If "yes," is the contribution
being removed prior to the tax return due date of the
year for which the contribution was made? o Yes (Use
code P.) o No (Use code 8.)
DISTRIBUTION I instruct the Custodian or Trustee to distribute from the
AMOUNT above account: (Check one.)
o 1. The entire account balance
o 2. $ ______________________ (fill in amount requested)
o 3. Special Instructions: _________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
Turn page for continuation of this agreement.
<PAGE>
SIGNATURES I certify that I am the proper party to receive payment(s)
from this IRA and that all information provided by me is true
and accurate. I further certify that no tax advice has been
given to me by the Custodian or Trustee. All decisions
regarding this withdrawal are my own. I expressly assume the
responsibility for any adverse consequences which may arise
from this withdrawal and I agree that the Custodian or Trustee
shall in no way be held responsible.
___________________________________________ _______________
ACCOUNTHOLDER OR BENEFICIARY DATE
___________________________________________ _______________
AUTHORIZED SIGNATURE - CUSTODIAN OR TRUSTEE DATE
<PAGE>
THE PARNASSUS
ROTH IRA
One Market-Steuart Tower #1600
San Francisco, California 94105
800-999-3505
415-778-0200