Instructions and Risks for Self-Directed Traditional, Roth, Rollover, & SEP IRA(Plan Agreement, Disclosure Statement & Trust Agreement) |
Before you complete any forms, read the Disclosure Statement and Trust Agreement in their entirety. Note: The Internal Revenue Service approved these documents before EGTRRA (Economic Growth and Tax Relief Reconciliation Act) was enacted. Please make sure you read the EGTRRA changes we have included in this package. CONSULT WITH YOUR ATTORNEY Carefully read the enclosed information. Please consult with your attorney or tax advisor if you are thinking about starting your own trust. TAX QUALIFICATION This master trust has received a favorable determination and has been assigned serial #D112099d. A copy of this letter can be found in the front of this booklet. TRUST INSTALLATION AND NOTICE Individual accounts will be opened by your broker. The title of the account will be as follows: Delaware Charter Guarantee & Trust Co., Trustee d/b/a Principal Trust Company
Name of Account Holder INVESTMENTSIt is your responsibility to direct the investment of the Trust funds. Investment directions may be given directly to your brokerage firm. Investment confirmations will be sent to you by the brokerage firm. Any transactions not generating a confirmation must be accompanied by additional written instructions. The facilities of your brokerage firm will be available to you so that you may obtain research material in connection with your investments. Your brokerage firm will receive only brokerage commissions or appropriate dealer markups for the purchase and sale of securities within your account. The brokerage firm cannot exercise discretion or control over your account, unless you are using the services of a registered investment advisor. Although they may provide investment information and advice to you, they do not intend that any advice given by them will serve as the primary basis for your investment decisions. Furthermore, it is our understanding that you will exercise independent judgment in making your investment decisions. CONTRIBUTIONS IMPORTANT: Forward all contributions to your brokerage firm. To make sure the contributions are associated with the proper tax year, the brokerage firm's cash statement must designate the tax year for which the contribution is made. If no year is designated, the contribution will be considered made in the tax year in which it is deposited. NOTE: With the exception of rollovers, contributions in excess of the allowable amount per year (as indexed), plus excess of allowable catch-up contributions (as indexed) (or such limits as may be established by law) cannot be accepted. Do not over-invest as this will cause a debit balance and may disqualify your Plan. Commissions are part of the cost of the investment and may not be paid separately. MAILING INSTRUCTIONSIf sent First Class, address to: IRA Department RECORDS It is extremely important for you to keep good records covering your contributions and investments. Remember that you assume the responsibility for filing all Federal and State tax returns and forms required as an Account Holder of a Traditional, Roth, Rollover, or SEP IRA. (Note: Our Federal Tax ID number should appear when opening cash accounts. It is 51-0099493. When a cash account is open, both Trustee & Account Holder must receive a statement). Disclosure Statement for Self-Directed Individual Retirement Accounts Internal Revenue Service (IRS) regulations (Section 1.408-6(d)(4)) require that trustees of Individual Retirement Accounts (IRAs) provide a Disclosure Statement to the individual for whose benefit the IRA is established. We provide the basic rules and benefits of your Delaware Charter Guarantee & Trust Company Self-Directed Individual Retirement Account in this Disclosure Statement. It also contains important tax and legal information. However, the Self-Directed Individual Retirement Trust Agreement issued by Delaware Charter Guarantee & Trust Company governs your IRA, and it will govern in the case of any discrepancy between this Trust Agreement and Disclosure Statement. When used in this document, the words you and your refer to the person for whom the IRA is established. We, us, and our refer to Delaware Charter Guarantee & Trust Company as trustee of your IRA. Roth IRA refers to either your Delaware Charter Guarantee & Trust Company Roth IRA or a Roth IRA at another financial institution. Traditional IRA refers to an IRA that is not a Roth IRA, Simplified Employee Pension Plan (SEP), or SIMPLE retirement account. Delaware Charter Guarantee & Trust Company is not licensed to practice law or give tax or financial advice. We strongly urge you to consult with your tax or legal advisor before you establish an IRA.I. Your Right to Revoke Your IRAYou can cancel your IRA within seven days of the date you adopt the Trust Agreement. If you cancel or "revoke" your IRA, we will return all of your funds, including your acceptance fee, to you. The notice of revocation must be in writing and signed by you. You can mail the notice to us at the following address: IRA Department If you send the notice by courier, the address is: IRA Department If you mail the notice, we will use the date of the postmark (or the date of certification or registration for certified or registered mail) as the date of the notice. You may call optionsXpress, Inc. at (888) 280-8020 if you have questions. II. IRS Approval LetterThe IRS approval letter at the end of this document certifies only that the IRS approves the form of the IRA. It does not represent a determination of the merits of the IRA investment plan. The following applies to Roth Individual Retirement AccountsIII. Statutory RequirementsA. Roth IRAs1. Types of contributionsYour Roth IRA can accept three different types of contributions.
2. Eligibility to establish a Roth IRAAnyone with earned income can set up a Roth IRA. This includes minor children. You must make contributions based on the rules in the following sub-sections. 3. Contribution LimitsThe maximum contribution you can make to your Roth IRA is based on the following four items:
4. Limitations and Restrictions on Deductibility of ContributionsContributions to a Traditional IRA do not include SEP or SIMPLE contributions made by you or your employer. You cannot take a deduction for a contribution to a Roth IRA. This is true whether or not you are a participant in an employer-sponsored plan and regardless of your adjusted gross income. You must meet certain income requirements to contribute to a Roth IRA. The maximum amount you can contribute for a year is $2000 (or such limits as prescribed by law) and is phased out for:
If you are entitled to make a partial contribution, you can figure how much of a contribution to make by following these steps:
Contributions to a Roth IRA are permitted after age 70½. Employer contributions are not permitted to a Roth IRA. 5. ConversionsGenerally, you may convert assets in a non-Roth IRA to a Roth IRA by paying taxes on the converted amount in the year of the conversion. a. General Conditions
b. Conversions and TransfersYou may make a rollover from one Roth IRA to another Roth IRA or convert from a Traditional IRA to a Roth IRA. You cannot convert assets from a qualified retirement plan to a Roth IRA. There is no dollar limit on the amount of the transfer. Any amount that you convert to a Roth IRA is includible in your gross income for the year in which it is distributed or transferred, not the year it is deposited into the Roth IRA. c. Conversion MethodsThere are three methods you can use to convert your assets from a Traditional IRA to a Roth IRA.
d. Inherited AccountsYou cannot rollover a Traditional IRA that you inherited, unless you inherit it from your spouse. e. Conversions from a SEP, SIMPLE, or Employer-Sponsored PlanYou can convert any amount in a SEP-IRA on the same terms as a Traditional IRA. You can convert amounts in a SIMPLE Retirement Account on the same terms as a Traditional IRA, except amounts distributed from a SIMPLE Retirement Account during the first two years of participation in the SIMPLE plan. You cannot convert amounts in an employer-sponsored plan to a Roth IRA. You can deposit qualified distributions from an employer-sponsored retirement plan into a Traditional IRA then you can convert them to a Roth IRA later. 6. ReconversionsA reconversion occurs when you recharacterize a conversion contribution made to a Roth IRA back to a Traditional IRA, then recharacterize it again to a Roth IRA. a. LimitsDuring 1999, a recharacterized amount could be reconverted only once. Effective January 1, 2000, an amount recharacterized from a Traditional IRA to a Roth IRA and then transferred back to a Traditional IRA by means of a recharacterization, may not be reconverted back to a Roth IRA before the later of:
If you make a reconversion that does not follow the above guidelines, it is treated as a "failed" conversion. This means it must be recharacterized back to a Traditional IRA. 7. Penalty TaxThe 10percent penalty does not apply to a non-qualified distribution that is used:
The penalty also does not apply to qualified distributions. Generally, a qualified distribution is any payment from your Roth IRA made after the fund have been in the account for five years and:
You or your beneficiary may owe a penalty tax if:
8. Minimum Distributions After DeathGenerally, if you are the non-spouse beneficiary of a Roth IRA, you must take receipt of the IRA by the end of the fifth calendar year after the Account Holder's death. There are certain exceptions to this rule for payments made over the life expectancy of the beneficiary. If you are the spouse beneficiary of a Roth IRA, you may postpone distributions until the year the decedent would have reached age 70 ½. You may also treat the IRA as if it is your own IRA. 9. Distributions/Transfers
10. SEP and SIMPLE Retirement AccountsSimplified Employee Pension contributions and SIMPLE contributions cannot be made to a Roth IRA. B. TRADITIONAL IRAs1. Types of contributionsYour Traditional IRA can accept three different types of contributions:
2. Eligibility to establish an IRAYou can set up and contribute to a Traditional IRA if you (or your spouse, if filing a joint tax return) received taxable compensation for the year and you were not age 70½ by the end of the calendar year. 3. Contribution LimitsThe maximum amount you can contribute to your Traditional IRA is the lesser of:
a. Limitations and Restrictions on Deductibility of ContributionsIf you or your spouse were covered by an employer-sponsored retirement plan at any time during the year for which you contributed, you may not be able to deduct all of your contribution(s). Your deduction may be reduced or eliminated depending on your income and tax filing status. If you are an active participant in an employer-sponsored plan, your IRA deduction will be reduced as follows:
If your spouse is an active participant in an employer-sponsored retirement plan but you are not, you can make a fully deductible IRA contribution if your joint modified adjusted gross income (MAGI) is less than $150,000. If your joint MAGI is greater than $150,000, but less than $160,000, your contribution will be only partly deductible. If your joint MAGI is greater than $160,000, you cannot take an IRA deduction. If you are not above the income level that would totally eliminate a deductible contribution, there is a $200 minimum deduction. b. Formula to Determine DeductibilityTo figure the amount of your deduction if you are an active participant and single:
If you are:
Figure your deduction as follows:
You must round up the result to the next highest $10 level. For example, if the result is $1525, you must round it up to $1530.
If you make a nondeductible contribution to an IRA, you must report the amount of the nondeductible contribution to the IRS as part of your tax return for the year. You are an active participant if you are covered by an employer-sponsored retirement plan for the year. You are covered by an employer-sponsored retirement plan 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 401(k)), SEP) or a plan which promises you a retirement benefit which is based on the number of years of service you have with the employer, your are likely to be an active participant. Your Form W-2 for the year should indicate whether you are a participant. You are an active participant even if your retirement benefit is not vested. You are also an active participant if you make required contributions or voluntary contributions to an employer-sponsored retirement plan. You may be an active participant even if you were only with the employer for part of the year. c. Contributions after age 70 ½No contribution is allowed for an individual during the taxable year when you reach age 70½ or later, however, you can make a contribution for your spouse if they are not yet age 70 ½ and otherwise qualified. d. Contributions by EmployersAn employer may also make deductible contributions to an IRA through a SEP IRA that meets the requirements of Section 408(k) of the Internal Revenue Code (Code). An employer may contribute up to 15 percent of compensation or $35,000, whichever is less, or such limits as prescribed by law. 4. IRA Rolloversa. General Conditions
5. Penalty TaxThe IRS imposes a 10 percent penalty tax on certain distributions made before you reach age 59 ½. Generally, you will not pay a penalty for distributions made:
You should consult with your tax advisor or IRS Publication 590 for more information on exceptions to the penalty tax. 6. Distributions and Transfersa. General ConditionsYou must identify all applicable assets in writing when requesting a distribution or transfer. Distributions are taxed as normal income in the year you receive them. Five and ten year averaging is not allowed. b. Non-taxable AmountsAny portion of an IRA distribution that consists of nondeductible contributions will not be taxed again. If you make any nondeductible IRA contributions, each distribution from your IRA will consist of a nontaxable portion (return of non-deductible contributions) and a taxable portion (return of deductible contributions if any, and account earnings). This means you cannot take a distribution that is entirely tax free. You should use the following formula to determine the non-taxable portion of your distributions for a taxable year:
c. Additional InformationThe following information applies to Traditional and Roth IRAs1. Types of Contributions
2. Prohibited TransactionsThe Tax Code prohibits you from using your IRA to engage in certain transactions. You may lose the tax-deferred status of your IRA if you engage in these transactions. Generally, those transactions are:
If your IRA loses it's tax-deferred status, you may have to include the entire amount of the earnings in your income for the year the tax-deferred status was lost. You may also be subject to the 10 percent penalty tax on premature distributions, unless you meet the requirements for one of the exceptions to that tax. Consult with your broker or account executive about certain restrictions that are imposed by the Trustee and the Brokerage Firm. Some examples of permissible investments include stocks, bonds, mutual funds, and certificates of deposit. This list is an example only and is not inclusive. For more information on prohibited transactions and certain exemptions, see Code Section 4975. 3. Gift TaxesThe gift tax exclusion for distributions is applicable to an IRA. In addition, the designation of a beneficiary of an IRA is not considered a transfer of property for federal gift tax purposes. 4. RecharacterizationsYou may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. You generally must have the contribution transferred from the first IRA to the second IRA in a trustee-to-trustee transfer. If you made the transfer by the due date of your tax return filing (including extensions) for the year during which you made the contribution, you can elect to treat the contribution as if it was made to the second IRA on the same date you actually made it. The transfer must include any net earnings allocable to the contribution. The contribution will not be treated as having been made to the second IRA if any deduction was allowed for the contribution to the first IRA. a. Previous tax-free transfersIf you moved a contribution from one IRA to another in a tax-fee transfer, such as a rollover, the contribution to the second IRA generally cannot be recharacterized. There is an exception for moves from a Traditional IRA to a SIMPLE Retirement Account. If you mistakenly roll over or transfer an amount from a Traditional IRA to a SIMPLE; you can later recharacterize the amount as a contribution to another Traditional IRA. b. Employer contributionsYou cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. c. Not counted as a rolloverThe recharacterization of a contribution is not treated as a rollover for purposes of the one-year waiting period. d. How to recharacterizeYou must notify both the trustee of the first IRA and the trustee of the second IRA that you have elected to treat the contribution as if you made it to the second IRA. You must make the notification by the date of the transfer. The notification must include:
5. Excess ContributionsAn excess contribution is one that you make that exceeds the amount you are allowed to make. The IRS may penalize you up to 6 percent of the excess contribution amount. a. Correcting the ExcessYou can make a correction before your tax-filing deadline to avoid the 6 percent tax penalty by:
You are responsible for computing the earnings and providing that figure to us on your completed distribution form. You may also owe the IRS a 10 percent premature distribution penalty tax on the earnings, even if you removed them before the tax-filing deadline. The 6 percent tax penalty will continue to be assessed each year, until you correct the excess contribution. You can avoid the penalty in subsequent years by:
If you correct only a part of the excess contribution, you will be continue to be liable for the tax on the amount not corrected. 6. Financial Disclosurea. The amount of money that will be available at any period of time depends on
b. Annual FeesYour Annual Trustee Fees depend on which Brokerage Firm services your IRA. Please check with your Brokerage's Firm Fee Schedule for all fees applicable to your account. If you fail to pay the Trustee's compensation, taxes, and/or expenses within a reasonable time after demand for payment is made, we reserve the right to charge the expenses to the Trust and liquidate such assets of the Trust as needed to satisfy the demand. The custodian will collect all fees, expenses, and taxes for the Trustee as directed by us. Such collection of fees by the custodian may be made without your approval or direction. The Trustee reserves the right to revise the fee schedules and will provide ample advance written or electronic notice of any revision to the Account Holder. Brokerage commissions are considered a separate cost and are in addition to the above fees charged by the Trustee. Questions about brokerage commissions should be discussed with your broker or account executive before any orders are executed. c. To compute and allocate annual earnings
7. InvestmentsIt is your responsibility to select and direct the investments of the Trust, either in person or through a broker, account executive or investment advisor. The investments you choose must conform to the Self-Directed IRA Trust Agreement. For example, you may invest in stocks, bonds, mutual funds, savings programs, and other lawful transactions as stated in the Trust. (This list is an example only.) Investments that do not generate confirmations must be accompanied by additional written instructions. No part of your IRA may be invested in collectibles (within the meaning of Code Section 408(m) except for certain coins and bullion defined in Code Section 408(m)(3). Any investments in collectibles will be treated as a distribution. No part of your IRA may be invested in life insurance contracts or commingled with other property, except in a common trust or investment fund, described in Code Section 408(a)(5). Although the Brokerage Firm may provide investment information to you, any information given by them should not serve as a primary basis for your investment decisions. Any questions about the authority of your broker should be directed to the Brokerage Firm. The broker is not an employee of Delaware Charter and Delaware Charter does not supervise or control the activity of the broker. Furthermore, it is our understanding that you will exercise independent judgment when you make your investment decisions. 8. IRS Form 5329You must file a Form 5329 (Return for Individual Retirement Savings Arrangement) with Form 1040 if you owe:
9. IRS Form 5498We will complete Form 5498 and mail it to the IRS each year. This form reports contributions, conversions, and rollovers received during the year. To ensure accuracy, the cash statement from the Brokerage Firm must reflect the applicable tax year for each contribution and note whether the contribution is a regular or rollover contribution. 10. Simplified Employee PensionIf you are an employer and wish to establish a Simplified Employee Pension Plan, you must obtain and complete Form 5305-SEP. This form is available at your local IRS office. You may also call the IRS at (800) 829-3676 or visit their web site at www.irs.gov/forms_pubs/forms.html. 11. Savings Incentive Match Plan for Employees (SIMPLE)Please contact our Customer Service area for Form 5305-SIMPLE if you want to establish a SIMPLE plan. 12. ArbitrationYou agree that all controversies between you and/or your beneficiaries and the Trustee and/or any of its officers, directors, or employees (present or former) concerning or arising from:
Arbitration Disclosures
The determination that any provision of this Self-Directed IRA Trust Agreement is not enforceable in accordance with its terms in a particular jurisdiction shall not affect the validity or enforceability of the remaining provisions of this Self-Directed IRA Trust Agreement generally or in any other jurisdiction or as to any other parties, but rather such unenforceable provisions shall be stricken or modified in accordance with such determination only as to such parties and this Agreement, as modified, shall continue to bind the specific parties involved therein and otherwise all other parties in unmodified form. Delaware Charter Guarantee & Trust Company's Self- Directed IRA Trust will be mailed to you upon the Trustee's acceptance. Further information can be obtained from any district office of the Internal Revenue Service. You should check with your legal counsel if you have any questions about how this information applies to your particular situation. Article IIntroductionThe purpose of this Trust is to establish a Traditional IRA under Code Section 408(a) or a Roth IRA under Code Section 408A to provide benefits for an individual or their beneficiaries upon their retirement, disability, or death. At no time shall the account be operated as both a Roth IRA and a Traditional IRA. Article IIDefinitionsAs used in both the Traditional IRA and Roth IRA Self-Directed Individual Retirement Trust Agreement, the following terms shall have the meanings set forth below, unless a different meaning is plainly required by the context: 2.1 Act means the Employee Retirement Income Security Act of 1974, as amended. 2.2 Account Holder means the individual whose name appears on the Trustee accepted application and for whom contributions have been received by this Trust. 2.3 Application means the Application through which the Account Holder adopts this Trust, as may be amended from time to time, and thereby agrees to be bound by all terms and conditions of this Agreement. 2.4 Beneficiary means the person(s) or entity (entities) properly designated by the Account Holder in the Application or in a form acceptable to the Trustee. 2.5 Brokerage Firm means the investment agent selected in the application or through other means acceptable to the Trustee. 2.6 Code means the Internal Revenue Code of 1986, as amended. 2.7 Compensation means wages, salaries, professional fees, or other amounts derived from or received for personal services actually rendered. This includes but is not limited to commissions paid salespersons, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, and bonuses. It also includes earned income, as defined in Code Section 401(c)(2) (reduced by the deduction the self-employed individual takes for contributions made to a self-employed retirement plan). For purposes of this definition, Code Section 401(c)(2) shall be applied as if the term trade or business, for purposes of Code Section 1402, included service described in subsection (c)(6). Compensation does not include amounts derived from or received as earnings or profits from property (including but not limited to interest and dividends) or amounts not includible in gross income. Compensation also does not include any amount received as a pension or annuity or as deferred compensation. Compensation does include any amount includible in the Account Holder's gross income under Code Section 71 with respect to a divorce or separation instrument described in subparagraph (A) of Section 71(b)(2). With respect to Roth IRAs, in the case of a married individual filing a joint return, the greater compensation of his or her spouse is treated as his or her own compensation, but only to the extent that such spouse's compensation is not being used for purposes of the spouse making a contribution to a Roth IRA or a deductible contribution to a non-Roth IRA. 2.8 Conversion Contribution means a rollover contribution described in Section 408(n) of the Code from a Traditional IRA, SEP, or SIMPLE IRA to a Roth IRA. 2.9 Designated Beneficiary means the beneficiary whose life expectancy is used to determine the amount of the required distribution, in accordance with Code Section 408(a)(6) and Proposed Treasury Regulation Section 1.408-8. 2.10 Disability means the Account Holder's inability to engage in any substantial, gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of a long-continued and indefinite duration and as further described in Code Section 72(m)(7). 2.11 Individual Retirement Account means an account established under section 408(a) of the Code. 2.12 Internal Revenue Service (IRS) means the agency responsible for administering and enforcing internal revenue laws, determination of pension plan qualification and exempt organization status, preparation and issuance of ruling and regulations to interpret the provisions of the Internal Revenue Code, and other responsibilities. 2.13 Modified Adjusted Gross Income (MAGI) means income as defined in Code Section 408A(c)(3)(C)(i) and does not include any amount included in adjusted gross income as a result of a rollover from a non-Roth IRA (a conversion). 2.14 Recharacterization means treating a contribution made to one IRA as having been made to a different type of IRA. 2.15 Reconversion means recharacterizing a conversion contribution as a contribution to a Traditional IRA, then converting the Traditional IRA to a Roth IRA again. Conversions can be reconverted one time during the calendar year during which they were made. 2.16 Regulations mean Federal Income Tax regulations, as amended from time to time. 2.17 Required Beginning Date means the date at which payments must be made from the account. 2.18 Roth IRA means an individual retirement account as defined in Section 408A of the Code. 2.19 Spousal IRA means an IRA funded by a married taxpayer for his or her spouse if the taxable compensation of the non-working spouse is less than that of the working spouse and the taxpayer files a joint return. 2.20 SIMPLE means a Savings Incentive Match Plan for Employees as defined in Section 408(p) of the Code. 2.21 SEP means a Simplified Employee Pension as defined in Sections 408(j) and 408(k) of the Code. 2.22 Traditional IRA means an IRA as defined in Section 408(a) of the Code. 2.23 Trust Year is the calendar year from January first (1st) to December thirty-first (31st). 2.24 Trustee means the Delaware Charter Guarantee & Trust Company (Delaware Charter), and any successor Trustee under the trust. 2.25 Trust means this Trust established hereunder as it may be amended from time to time, including the Application, which is part of the Trust. 2.26 Trust Agreement means this document which establishes and sets forth the material terms of the Self-Directed Individual Retirement Trust Agreement. Article IIIRoth IRAs The references to IRAs in this Article refer only to Roth IRAs unless noted otherwise.3.1 Eligibility A. An eligible Individual is any person who received compensation for services (including earned income of a self-employed individual) during the taxable year and has a modified adjusted gross income (MAGI) which is less than the amount allowed for their filing status. B. As a condition of participation, the Account Holder is required to consent to the terms and conditions of this Trust, as may be amended from time to time. Agreement need not be in writing. 3.2 Contributions A. Each taxable year, the Account Holder may contribute on a periodic basis to this Trust an amount not to exceed the lesser of two thousand dollars ($2,000) or one-hundred percent (100 %) of compensation, or the applicable statutory limit. A qualified rollover contribution or recharacterization (as described in Section 3.2 and 3.3 does not apply toward the contribution limit). B. The contribution limit is reduced if the Account Holder's filing status is:
C. If the Account Holder's contribution limit is reduced because of MAGI the result is rounded up to the nearest $10. If the contribution limit is greater than $0, but less than $200, the amount is rounded up to $200. D. Contributions to this Roth IRA are also reduced by the amount of contributions made to a Traditional IRA. E. For purposes of Sections 3.2(A) above, MAGI has the same meaning as defined in Code Section 408A(c)(3)(C)(I). MAGI does not include amounts includible in Adjusted Gross Income because of a conversion from a Traditional IRA. F. A regular contribution to a Traditional IRA or a SIMPLE plan may be recharacterized as a regular contribution to this Roth IRA subject to the terms and limitations in Treasury Regulation Section 1.408-5 and Section 3.4 below. G. No amounts made under a SIMPLE plan established by an employer under Code Section 408(p) or a SEP established by an employer under Code Section 408(j) or (k) will be accepted into this Trust. H. No amounts attributable to an employer contribution to a SIMPLE plan can be converted to a Roth IRA during the 2-year period beginning on the date the Account Holder first participated in the SIMPLE. I. Contributions may be made after age 70½. 3.3 Rollovers A. This Trust will accept rollovers from other Roth IRAs provided they are deposited within 60 days of the date distributed from the previous Roth IRA as permitted under applicable laws. A qualified rollover is one that meets the requirements of Section 408(d)(3) of the Code, except the one rollover per twelve consecutive months rule does not apply if the rollover is from an IRA other than a Roth IRA. B. Rollover Contributions from a non-Roth IRA cannot be made if:
The $100,000 limit shall apply in the year that the assets are distributed from the Traditional IRA and not the date they are deposited into the Roth IRA. For the purposes of this Section 3.3 (B), a husband and wife are not treated as married for a taxable year if they have lived apart at all times during that taxable year and file separate returns for that taxable year. C. Conversion amounts must be qualified rollover contributions under Code Section 408A(e), and therefore, must satisfy Code Section 408(d)(3). D. Any amount converted from a non-Roth IRA to a Roth IRA will be treated as a distribution from the non-Roth IRA and a rollover to the Roth IRA regardless of the actual means by which the assets are converted. E. Amounts held in a SEP or SIMPLE plan may be converted. In the case of a SIMPLE plan, the conversion may be done only after the expiration of the two-year period as described in Code Section 72(t)(6). No SEP or SIMPLE contributions can be made to a Roth IRA. Amounts held in retirement plans other than IRAs cannot be converted directly to a Roth IRA. 3.4 Recharacterizations A. On or before the due date for filing taxes, plus extensions, an Account Holder may recharacterize IRA contributions, including Roth IRA Conversion Contributions by means of a Trustee transfer. Recharacterized amounts will be treated as if they were made to the transferee plan and not the transferor plan if such recharacterizations are made in compliance with Code Section 408A(d)(6), Treasury Regulation Section 1.408A-5, and other applicable laws or regulations. B. Beginning January 1, 2000, amounts that are transferred from a Traditional IRA to a Roth IRA by means of a recharacterization may not be converted before the later of the beginning of the taxable year following the taxable year in which the amount was converted to a Roth IRA or the end of the 30-day period beginning on the day on which the Account Holder recharacterizes the amount from the Roth IRA back to the Traditional IRA. A Reconversion made before the later of the beginning of the next taxable year or the end of the 30-day period is treated as a failed Reconversion. For this purpose only, a failed Conversion Contribution that is the result of a failure to satisfy the statutory requirements for a Conversion contribution is treated as a Conversion contribution in determining when the Account Holder can make a Reconversion. 3.5 Distributions A. The Account Holder is not required to take distributions from his or her Roth IRA during their lifetime. The Beneficiary must take distributions as outlined in Paragraphs F through L of this Section, 3.4. B. Distributions that are not included in income are:
A qualified distribution is a distribution of assets that have been in the account for five years and:
C. Withdrawals of excess contributions and the earnings on them before the due date of your tax return (including extensions) are not qualified distributions. The earnings are taxable in the year for which the contribution was made and may be subject to a 10 percent early distribution penalty. D. Distributions that are not qualified distributions may be partially taxable. The tax treatment of these withdrawals and the earnings thereon must be withdrawn according to the order and aggregation rules as outlined in Code Section 408A(d)(F)(4). E. The taxable portion of other withdrawals that are not qualified distributions are subject to the additional tax on premature distributions, unless one of the exceptions applies. F. If the Account Holder dies before their entire interest is distributed, the balance will be distributed to the Beneficiary or Beneficiaries as if the account was a Traditional IRA and the Account Holder died before his or her Required Beginning Date. G. If the Beneficiary is a non-spouse Beneficiary, the entire interest must be:
Payments made over life expectancy must begin before the end of the calendar year following the year of the Account Holder's death. The life expectancy of a non-spouse Beneficiary or Beneficiaries cannot be recalculated. H. If the Beneficiary has not made an election by December 31 of the year following the year of the Account Holder's death, the Trustee reserves the right to distribute the assets in any one of the following ways:
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FBO Traditional, Roth, Rollover, or SEP IRA