Retirement Accounts Roth Individual Retirement Custodial Account Agreement

Transcription

1 Retirement Accounts Roth Individual Retirement Custodial Account Agreement Sponsored By: U.S. Global Investors, Inc., 7900 Callaghan Road San Antonio, TX US.FUNDS

2

3 ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT AGREEMENT Sponsored By U.S. GLOBAL INVESTORS, INC Callaghan Road San Antonio, Texas You can revoke your participation in this Account without charge or fee of any kind if you notify us within seven business days of the date on which you established the Roth IRA Account. Oral notification may be given by phone during business hours. If you prefer, you may notify us in writing by mail. If you notify us by mail, the revocation is deemed made on the date of mailing. For this purpose, a notice is deemed mailed on the date of the postmark (or if sent by certified or registered mail, the date of certification or registration) if it is deposited in the mail in the United States in an envelope, or other appropriate wrapper, first class postage prepaid and properly addressed.

4

5 THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. UNAUTHORIZED USE, DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR. TABLE OF CONTENTS PAGE ARTICLE I...1 DEFINITIONS Account/Roth Account Adjusted Gross Income (AGI) Applicable Dollar Amount Beneficiary Code Compensation Conduit IRA Custodian Disability Eligible Retirement Plan Eligible Rollover Distribution Individual Inherited IRA IRA Application Life Expectancy Maximum Permissible Amount Modified AGI Per Stirpes Plan/Roth IRA Plan Year Qualified Reservist Distribution Qualified Retirement Plan Qualified Rollover Contribution Qualified Special Purpose Distribution SIMPLE IRA Sponsor Spouse/Surviving Spouse Tax Year/Taxable Year Traditional IRA Or Non-Roth IRA Account...5 ARTICLE II...5 CONTRIBUTIONS Establishment Of Roth IRA Account Maximum Permissible Amount Spousal Contribution Rollover From A Qualified Retirement Plan Rollover Or Transfer From An IRA Other Than A Roth IRA Rollover Or Transfer From Another Roth IRA Conversion Of Roth IRA Account With The Same Trustee Recharacterized Contributions Election To Recharacterize A Roth IRA Contribution Or A Taxable Year Rollover Of Exxon Valdez Settlement Income Excess Contribution Military Death Gratuities And Servicemembers Group Life Insurance (SGLI) Payments Rollover Of Airline Payments Timing Of Contributions...9 ARTICLE III...9 INVESTMENT OF ACCOUNT Maintenance Of An Individual s IRA Investment Options Brokerage Account Directed Investments Default Provision...10

6 3.6 Nonforfeitability Transfers Incident To Divorce Prohibited Transactions...10 ARTICLE IV...11 DISTRIBUTIONS Qualified Distributions Nonqualified Distributions Form Of Payment Distributions Commencing Prior To Death Distributions After Death Ordering Rules Upon Death Of Individual Minimum Payment Separate Accounts Closing The Account Payment Directions Method Of Payment When A Marital Trust Is The Beneficiary Qualified Reservist Distributions Withdrawal Of Economic Stimulus Payments Qualified Hurricane Distributions Qualified Recovery Assistance Distributions...14 ARTICLE V...14 ADMINISTRATIVE DUTIES Duties Of Custodian Duties Of Individual Payment Of Fees And Expenses Investment Management And Advisory Fees...15 ARTICLE VI...15 POWERS AND RESPONSIBILITIES In General Investment Discretion Written Instructions Investment Instructions Records Proxies And Voting Right To Request Judicial Assistance Right To Adjudicate Claims Of Multiple Beneficiaries Indemnification Substitution Of Non-Bank Custodian Assignment Of Agreement...17 ARTICLE VII...17 AMENDMENT AND TERMINATION Right To Amend IRS Qualification Right To Resign The Individual s Right To Terminate...17 ARTICLE VIII...17 GOVERNING LAW...17 ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT ARRANGEMENT...1 DISCLOSURE STATEMENT...1 2

7 ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT AGREEMENT This document is for use by Individuals who wish to establish a Roth Individual Retirement Account (Roth IRA) and contains the rules an Individual must follow to gain the tax benefits of a Roth IRA. To establish a Roth IRA Account, sign the Roth IRA Application Form and return it to the Sponsor. Once the Account is established, the Sponsor will accept and invest contributions in accordance with the Individual s investment directions unless another person or entity has been granted investment management responsibility. Periodically, the Individual will receive a statement reflecting the investment performance of the assets in the Roth IRA. Distributions from this Account will be made at the Individual s direction. The Account will be established and administered for the exclusive benefit of the Individual and his or her Beneficiaries. ARTICLE I DEFINITIONS 1.1 Account/Roth Account A Roth IRA as described in Article II below. No Account established under this Agreement may accept Traditional IRA, SEP-IRA, SAR-SEP, SIMPLE IRA, or Coverdell Education Contributions. This Roth IRA Account is established for the exclusive benefit of the Individual or his or her Beneficiaries. If this is an Inherited IRA within the meaning of Code 408(d)(3)(C) maintained for the benefit of a designated Beneficiary of a deceased Individual, references in this document to the Individual are to the deceased Individual. 1.2 Adjusted Gross Income (AGI) "AGI" shall mean adjusted gross income as reported on an Individual's Federal income tax return but modified, in accordance with Code 219(g)(3), to adjust for social security benefits and passive activity losses and credits and to include foreign earned income, adoption assistance or expenses and income from U.S. Savings Bonds used to pay higher education tuition and fees, and further modified, in accordance with Code 408(c)(3)(C), to exclude any amount included in income due to a conversion from a Traditional or Regular IRA to a Roth IRA. 1.3 Applicable Dollar Amount Applicable Dollar Amount shall mean (i) $150,000, in the case of an Individual filing a joint Federal income tax return, (ii) $95,000, in the case of any other Individual (other than a married Individual filing separately), and (iii) $0, in the case of a married Individual filing separately. 1.4 Beneficiary The person or persons or trust designated to receive the balance held in the Account upon the Individual s death. If the Individual has failed to designate a Beneficiary or all Beneficiaries have predeceased the Individual, the Sponsor will distribute the Individual s entire Account balance to the Individual s survivors in the following order of preference: (a) (b) (c) Spouse, if any, children, if any, in equal shares Per Stirpes (as defined at paragraph 1.18), and the executor or personal representative of the Individual's estate. A trust, estate, charitable organization or other non-living entity may be designated as a Beneficiary or contingent Beneficiary. The Individual may change their Beneficiary at any time by executing and returning to the Sponsor a new beneficiary designation form. The designation will become valid when accepted by the Sponsor. If the Individual establishing this Plan is a resident of a community property state, the Individual will need the written consent of the Individual's Spouse to terminate the Spouse s interest in the Individual's Roth IRA in order to designate a primary Beneficiary other than the Individual's Spouse. In the event that the order of the deaths of the Individual and any primary Beneficiary or on Inherited Accounts, of the Beneficiary and any primary Contingent Beneficiary cannot be determined or are deemed to have occurred simultaneously under the law of the Individual s or the Beneficiary s domicile, as the case may be, the survivor shall be that person who is determined to survive in accordance with the law of that state at the time of the Individual s or Beneficiary s death, as the case may be. In the event that the death of the Individual or any Beneficiary is the result of a criminal act involving any other Beneficiary, the Sponsor may look to the state of domicile, including any slayer or similar statute, to determine the rights of the Beneficiaries to the assets in the Account. Contingent Beneficiary means the person or entities entitled to receive any undistributed amount credited to the Account at the time of the Beneficiary s death. A Beneficiary, whether designated by the Individual or by operation of this paragraph 1.4 may disclaim all or any part 1

8 of the Beneficiary s interest in the Account by giving written notice of such disclaimer to the Custodian, the Account shall be distributed as if the disclaiming Beneficiary had predeceased the Individual in accordance wit the Income Tax Regulation under Code 401(a)(9). Notwithstanding any other provision to the contrary, the Beneficiary of an Individual after the Individual s death may name a successor Beneficiary including but not limited to a non-spouse Beneficiary to continue to receive required minimum distributions over the original Beneficiary s remaining distribution schedule. The distribution period has been fixed at the point the Beneficiary begin taking the distributions and the successor Beneficiary s age and life expectancy are not relevant to the distribution schedule. 1.5 Code The Internal Revenue Code of 1986, as amended. Reference to any section or subsection of the Code, includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection, and also includes reference to any Regulation issued pursuant to or with respect to such section or subsection. 1.6 Compensation The wages, salaries, professional fees, overtime, or other amounts derived from or received for personal services actually rendered (including, but not limited to commission paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses) during a Taxable Year. If the Individual is self-employed or a partner, Compensation means earned income from self-employment. Earned income is defined at Code 401(c)(2) and is reduced by the deduction taken as a self-employed individual for contributions made to a self-employed retirement plan. Earned income may also be applied to Individuals, described in Code 1402(c)(6), that are members of a religious faith or sect that cannot accept public or private insurance such as Social Security benefits. 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 (determined without regard to Code 112). Compensation also does not include any amount received as a pension or annuity or as deferred compensation. Compensation includes any taxable amount received in a divorce or separate maintenance instrument described in Code 71(b)(2)(A). 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 an IRA contribution. The term Compensation also includes any differential wage payments as defined in Code 3401(h)(2). 1.7 Conduit IRA An Individual Retirement Account which is the recipient of a rollover or direct transfer of benefits paid to the Individual from a Code 403(b) plan or account or Qualified Retirement Plan. 1.8 Custodian The financial institution who makes this Roth IRA available to qualifying Individuals. 1.9 Disability A medically determinable physical or mental impairment which prohibits an Individual from engaging in any substantial gainful activity and which can be expected to result in death or to be of long continued and indefinite duration as defined in Code 72(m)(7) Eligible Retirement Plan An Eligible Retirement Plan is an eligible plan described under Code 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such Plan from this Plan, an Individual Retirement Account described in Code 408(a), an Individual Retirement Annuity described in Code 408(b), an annuity plan described in Code 403(a), an annuity contract described in Code 403(b), or a qualified plan described in Code 401(a), which accepts the Individual s Eligible Rollover Distribution. The definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving Spouse, or to a Spouse or former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code 414(p). If any portion of an Eligible Rollover Distribution is attributable to payments or distributions from a designated Roth account, an Eligible Retirement Plan with respect to such portion shall include only another designated Roth account of the Individual from whose account the payments or distributions were made, or a Roth IRA of such Individual Eligible Rollover Distribution An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of an Individual except that an Eligible Rollover Distribution does not include: (a) any distribution that is one of a series of substantially equal periodic payments made not less frequently than annually for the life (or life expectancy) of an Individual or the joint lives (or joint life expectancies) of an Individual and the Individual s Beneficiary, or for a specified period of ten (10) years or more, 2

9 (b) any distribution to the extent such distribution is required under Code 401(a)(9), (c) any hardship withdrawal distribution under Code 401(k)(2)(B)(i)(IV) received after December 31, 1998, (or in accordance with IRS Notice 99-5, received after December 31, 1999). (d) the portion of any distribution that would not be includible in gross income if paid to the Individual (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities), (e) any excess amounts that is returned to an Individual in accordance with Code 415, (f) any other distribution(s) that is reasonably expected to total less than $200 during a year, (g) any corrective distributions of excess elective deferrals under Code 402(g), and the income allocable thereto, (h) any corrective distributions of excess contributions and excess aggregate contributions under Code 401(k) and Code 401(m), and the income allocable thereto, (i) (j) any PS 58 costs, and any dividends paid on securities under Code 404(k). A portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an Individual Retirement Account or Annuity described in Code 408(a) or (b), or to a qualified defined contribution plan described in Code 401(a) or Code 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible Individual The person who has signed the Roth IRA Application and has established a Roth Individual Retirement Account under this document, which may be amended from time to time Inherited IRA An Inherited IRA is a Roth IRA whose Beneficiary is a person or entity named by the IRA owner to receive the Roth IRA benefits after Individual dies. A Surviving Spouse may roll over an Inherited Roth IRA distribution to another Roth IRA or make the Inherited IRA his or her own. If a Roth IRA is inherited from anyone other than the deceased Spouse, the Beneficiary cannot treat the Roth IRA as his or her own. Consequently, Roth IRA contributions cannot be made to an Inherited Roth IRA, nor can rollover amounts be made to or from the Inherited Roth IRA. However, the Beneficiary may directly transfer the Inherited Roth IRA to another custodian or trustee as long as the IRA into which amounts are being moved is established and maintained in the name of the deceased IRA owner for the benefit of such Beneficiary IRA Application The Account application, which establishes a Roth Individual Retirement Account ("Roth IRA"), under this document Life Expectancy The life expectancy of the Individual. Life expectancy is determined by reference to the return multiple contained in the tables published at of the Income Tax Regulations Maximum Permissible Amount Except in the case of a Qualified Rollover Contribution or a recharacterization [as defined in paragraph 2.8], no contribution will be accepted unless it is in cash and the total of such contributions to all the Individual s Roth IRAs for a Taxable Year does not exceed the applicable amount [as defined in paragraph 2.2(b], or the Individual s Compensation, if less, for that Taxable Year. The contribution described in the previous sentence that may not exceed the lesser of the applicable amount or the Individual s Compensation is referred to as a Regular Contribution. However, notwithstanding the dollar limits on contributions, an Individual may make additional contributions specifically authorized by statute such as repayments of Qualified Reservist Distributions, repayments of certain plan distributions made on account of a Federally declared disaster and certain amounts received in connection with the Exxon Valdez litigation. Contributions may be limited as described in paragraph Modified AGI An Individual s Modified AGI for a Taxable Year is defined in Code 408A(c)(3)(C)(i) and does not include any 3

10 amount included in Adjusted Gross Income as a result of a rollover from a non-roth IRA (a conversion ) Per Stirpes When the Individual dies and there is no Beneficiary Designation on file or no surviving Beneficiary(ies), the Account shall be divided into as many equal shares as there are surviving descendents in the generation nearest to the decedent that contains at least one surviving descendent and deceased decedents in the same generation who left surviving descendents, if any. The share of each deceased descendent who leaves surviving descendents is divided in the same manner, with the subdivision repeating until the property is fully allocated among surviving descendents. A descendent who dies before the descendent and who leaves no surviving descendent is disregarded Plan/Roth IRA An Individual Retirement Account established under Code 408A and the terms of this document, as it may be amended from time to time, under which contributions are not tax deductible and qualifying distributions are not taxable to the Individual Plan Year The twelve (12) month period starting on January 1 and ending on December Qualified Reservist Distribution Any distribution to an Individual if: (a) such distribution is from an Individual Retirement Account, or from amounts attributable to employer contributions made pursuant to elective deferrals described in Code 402(g)(3)(A) or (C) or Code 501(c)(18)(D)(iii), (b) such Individual was [by reason of being a member of a reserve component (as defined in Section 101 of Title 37, United States Code)] ordered or called to active duty for a period in excess of 179 days or for an indefinite period, and (c) such distribution is made during the period beginning on the date of such order or call and ending at the close of the active duty period. Any Individual who receives a Qualified Reservist Distribution may, at any time during the two (2) year period beginning on the date after the end of the active duty period, make one (1) or more contributions to an Individual Retirement Account of such Individual in an aggregate amount not to exceed the amount of such distribution. The dollar limitations otherwise applicable to contributions to Individual Retirement Accounts shall not apply to any contribution made pursuant to the preceding sentence. No deduction shall be allowed for any contribution pursuant to this paragraph. The 10% early withdrawal penalty tax will not apply to any Qualified Reservist Distribution. This paragraph applies to Individuals ordered or called to active duty after September 11, 2001, and before December 31, In no event shall the two (2) year period referred to above end before August 17, 2008 [the date which is two (2) years after the date of the enactment of the Pension Protection Act of 2006] Qualified Retirement Plan A corporate or self-employed retirement plan qualified under Code 401(a) and exempt from tax under Code 501(a); an annuity plan described in Code 403(a); a qualified bond purchase plan described in Code 405(a) which was in existence prior to 1984; or a plan under which amounts were contributed by an employer for an annuity contract or custodial account described in Code 403(b) Qualified Rollover Contribution A Qualified Rollover Contribution is a rollover contribution of a distribution from an Eligible Retirement Plan described in Code 402(c)(8)(B). If the distribution is from an IRA, the rollover must meet the requirements of Code 409(d)(3), except the one-rollover-per-year rule of Code 409(d)(3)(B) does not apply if the distribution is from a non-roth IRA. If the distribution is from an Eligible Retirement Plan other than an IRA, the rollover must meet the requirements of Code 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 403(d)(3) or 457(e)(16), as applicable. A Qualified Rollover Contribution also includes (a) and (b) below: (a) All or part of a military death gratuity or service members group life insurance ( SGLI ) payment may be contributed if the contribution is made within one (1) year of receiving the gratuity or payment. Such contributions are disregarded for purposes of the one-rollover-per-year rule under Code 408(d)(3)(B). (b) All or part of an airline payment (as defined in 125 of the Worker, Retiree, and Employer Recovery Act of 2008 ( WRERA ), Pub. L ) received by certain airline employees may be contributed if the contribution is made within 180 days of receiving the payment. 4

11 1.24 Qualified Special Purpose Distribution A distribution to an Individual who is a qualified first-time homebuyer, as defined under Code 72(t)(8), to the extent such distribution is used by the Individual before the close of the 120th day after the day on which such distribution is received to pay qualified acquisition costs with respect to a principal residence of the Individual, the Spouse of such Individual, or any child, grandchild, or ancestor of such Individual or the Individual s Spouse SIMPLE IRA A qualified salary deferral arrangement described in Code 408(p) under which employer and employee contributions are made to IRAs which qualify as SIMPLE IRA accounts under Code 408(p) and to which no other IRA contributions other than rollover contributions from other SIMPLE IRAs may be made Sponsor The institution and any successor thereto, which makes this document available Spouse/Surviving Spouse The person to whom an Individual is married, or was married in the case of a deceased Individual who was married at the time of his or her death. A former Spouse will be treated in the same manner as a Spouse to the extent provided under a Qualified Domestic Relations Order as described in Code Section 414(p) Tax Year/Taxable Year The period for which an Individual must report income on his or her Federal income tax return. The tax return of most Individuals is based on the calendar year Traditional IRA Or Non-Roth IRA Account An individual retirement account or individual retirement annuity described in Code 408(a) or (b), respectively, established by or for the benefit of an Individual and shall, where the context so requires, include a Traditional IRA, SEP IRA, SARSEP IRA, SEP Traditional IRA, Rollover IRA and Combined IRA. ARTICLE II CONTRIBUTIONS 2.1 Establishment Of Roth IRA Account Any Individual who meets the requirements of this Article II may establish this Account. The Roth IRA shall become effective when the Sponsor accepts and executes the Roth IRA Account Application. A duly authorized representative may establish a Roth IRA on behalf of another person includes a parent, legal guardian, conservator or other court-appointed representative of a minor child or incapacitated adult, an attorney-in-fact acting under a power of attorney, the personal representative of a decedent s estate or the beneficiary of an individual s interest in a Retirement Plan or IRA. A parent or guardian of a minor child may establish a Roth IRA on behalf of the minor child. In the case of any contribution to a Roth IRA established for a minor child, the child must have Compensation for the Taxable Year for which the contribution is made. 2.2 Maximum Permissible Amount (a) Except in the case of a Qualified Rollover Contribution or a recharacterization [as defined in (f) below], no contribution will be accepted unless it is in cash and the total of such contribution to all the Individual s Roth IRAs for a taxable year does not exceed the applicable amount [as defined in (b) below], or the Individual s Compensation, if less, for that Taxable Year. The contribution described in the previous sentence that may not exceed the lesser of the applicable amount or the Individual s Compensation is referred to as a Regular Contribution. However, notwithstanding the dollar limits on contributions, an Individual may make additional contributions specifically authorized by statute such as repayments of Qualified Reservist Distributions, repayments of certain plan distributions made on account of a Federally declared disaster and certain amounts received in connection with the Exxon Valdez litigation. (b) The applicable amount is determined under (i) or (ii) below: (i) If the Individual is under age fifty (50), the applicable amount is $5,000 for any Taxable Year beginning in 2008 and years thereafter. After 2008, the $5,000 amount will be adjusted by the Secretary of the Treasury for cost-of-living increases under Code 219(b)(5)(D). Such adjustments will be in multiples of $500. (ii) If the Individual is age fifty (50) or older, the applicable amount under paragraph (i) above is increased by $1,000 for any Taxable Year beginning in 2006 and years thereafter. (iii) If the Individual was a participant in a Code 401(k) plan of a certain employer in 5

12 bankruptcy described in Code 219(c)(5)(C), then the applicable amount under paragraph (i) above is increased by $3,000 for Taxable Years beginning after 2006 and before 2010 only. An Individual who makes contributions under this subparagraph (iii) may not also make contribution under subparagraph (ii). Contributions may be made to this Roth IRA even after the Individual has reached age 70½. (c) The maximum Regular Contribution that can be made to all the Individuals Roth IRAs for a Taxable Year is the smaller amount determined under (i) or (ii) below. (i) The maximum Regular Contribution is phased out ratably between certain levels of modified Adjusted Gross Income ( Modified AGI, ) in accordance with the following table for the 2010 Tax Year: Filing Status Full Contribution Phase-Out Range No Contribution Modified AGI Single or Head of Household Less than $105,0000 Between $105,000 and $120,000 $120,000 or more Joint Return Or Qualifying Widow(er) Less than $167,000 Between $167,000 and $177,000 $177,000 or more Married-Separate Return $0 Between $0 and $10,000 $10,000 or more An Individual s Modified AGI for a Taxable Year is defined in Code 408A(c)(3) and does not include any amount included in AGI as a result of a Qualified Rollover Contribution. If the Individual s Modified AGI for a Taxable Year is in the phase-out range, the maximum Regular Contribution determined under this table for that Taxable Year is rounded up to the next multiple of $10 and is not reduced below $200. After 2006, the dollar amounts above will be adjusted by the Secretary of the Treasury for cost-of-living increases under Code 408A(c)(3). Such adjustments will be in multiples of $1,000. (ii) If the Individual makes Regular Contributions to both Roth and non-roth IRAs for a Taxable Year, the maximum Regular Contribution that can be made to all the Individual s Roth IRAs for that Taxable Year is reduced by the Regular Contributions made to the Individual s non-roth IRAs for the Taxable Year. (d) No contributions will be accepted under a SIMPLE IRA plan established by any employer pursuant to Code 408(p). Additionally, no transfer or rollover of funds attributable to contributions made by a particular employer under its SIMPLE IRA plan will be accepted from a Simple IRA that is used in conjunction with a SIMPLE IRA plan, prior to the expiration of the two (2) year period beginning on the date the Individual first participated in that employer s SIMPLE IRA plan. (e) accepted. If this is an Inherited IRA within the meaning of Code 408(d)(3)(C), no contributions will be (f) A Regular Contribution to a non-roth IRA may be recharacterized pursuant to the rules in 1.408A- 5 of the Regulations as a Regular Contribution to this IRA, subject to the limits in (c) above. (g) For purposes of paragraphs (a) and (c) above, an Individual s Modified AGI for a Taxable Year is defined in Code 408A(c)(3) and does not include any amount included in adjusted gross income as a result of a rollover from an Eligible Retirement Plan other than a Roth IRA (a conversion ). 2.3 Spousal Contribution (a) A working Individual may make a nondeductible cash contribution on behalf of his or her nonworking Spouse in an amount up to the lesser of $5,000 or 100% of the sum of the Compensation includible in the Individual s gross income for the Taxable Year, plus the Compensation includible in the gross income of the Individual s Spouse for the Taxable Year; reduced by, the sum of the contributions for such Taxable Year made to all other IRAs, including Roth IRAs, maintained for the benefit of the Spouse. (b) The maximum dollar amount for a Taxable Year for married Individuals filing a joint Federal income tax return and qualifying widow(er)s is reduced if such Adjusted Gross Income on the joint income tax return is between $167,000 and $177,000 (in 2010). No contribution is allowed for either Individual if their Adjusted Gross Income is in excess of $177,000 for the applicable Taxable Year. If the Individual's Adjusted Gross Income for the Taxable Year is in the phase-out range, the maximum contribution is 6

13 rounded up to the next multiple of $10 and is not reduced below $ Rollover From A Qualified Retirement Plan For Taxable Years beginning after 2007, an Individual may roll over to this or any other Roth IRA any part of a distribution received from a Qualified Retirement Plan, provided the requirements at paragraph 2.5(d) are met. For Tax Years starting in 2010, the Modified AGI limit for conversions and rollovers to Roth IRAs is eliminated and married taxpayers filing a separate return can now convert and roll over amounts to a Roth IRA. Individuals must include in their gross income distributions from a Qualified Retirement Plan that would have been included in income had the rollover not taken place. Any return of contributions (after-tax contributions) distributed from a Qualified Retirement Plan is not included in the Individual s gross income. For any conversations or rollovers in 2010, amounts required to be included in income may be included entirely in 2010, or in equal amounts in 2011 and Rollover Or Transfer From An IRA Other Than A Roth IRA An Individual may roll over or arrange for a direct transfer of all or part of an existing IRA (including a Conduit or SIMPLE IRA), to this Roth IRA provided that: (a) a single Individual s Adjusted Gross Income does not exceed $100,000 for the Taxable Year, or if the Individual is married, such Individual and his or her Spouse do not have a combined Adjusted Gross Income in excess of $100,000 and they file a joint income tax return for the Taxable Year (an Individual who is married and files a separate income tax return cannot make a rollover or transfer from an existing IRA to this Roth IRA), (b) Individual, the amount to be rolled over is contributed no later than the sixtieth (60 th ) day after receipt by the (c) if property other than money is distributed from the other IRA, the same property or the proceeds from the sale is transferred to this Roth IRA, (d) the Individual confirms to the Custodian that the rollover consists solely of amounts transferred from the other IRA, and (e) no transfer or rollover of funds will be accepted from a SIMPLE IRA before the expiration of the two (2) year period beginning on the date the Individual first participated in the SIMPLE IRA. (f) Beginning in 2010, the Modified AGI and filing status requirements for converting a Traditional IRA to Roth IRA are eliminated. Individuals who rollover or transfer existing Traditional or Regular IRAs to this Roth IRA must include in income the taxable portion of the rollover or transfer as if such amount had been distributed to the Individual in the Taxable Year during which the rollover or transfer took place. For any conversion in 2010, amounts that are required to be included in income may be included entirely in 2010 or in equal amounts in 2011 and Rollover Or Transfer From Another Roth IRA An Individual may rollover or directly transfer all or any part of his or her account held under the terms of another Roth IRA to this Roth IRA provided that: (a) Individual, the amount to be rolled over is contributed no later than the sixtieth (60 th ) day after receipt by the (b) if property other than money is distributed from the other IRA, the same property or the proceeds from the sale of such property is transferred to this Roth IRA, (c) the Individual confirms to the Custodian that the rollover consists solely of amounts transferred from the other IRA, and (d) no similar rollover has taken place within the one (1) year period ending on the date the distribution is received by the Individual. 2.7 Conversion Of Roth IRA Account With The Same Trustee Conversions and recharacterizations made with the same Custodian may be accomplished by redesignating the account or annuity contract, rather than by the opening of a new account or the issuing of a new annuity contract for each conversion or recharacterization. 2.8 Recharacterized Contributions If an Individual makes a contribution to an IRA (the first IRA) for a Taxable Year and then transfers the contribution (or a portion of the contribution) in a trustee-to-trustee transfer from the trustee of the first IRA to the trustee of another 7

14 IRA (the second IRA), the Individual can elect to treat the contribution as having been made to the second IRA, instead of to the first IRA, for Federal tax purposes. A transfer between the first IRA and the second IRA will not fail to be a trustee-to-trustee transfer merely because both IRAs are maintained by the same trustee. For purposes of Code 408A(d)(6), redesignating the first IRA as the second IRA will be treated as a transfer of the entire account balance from the first IRA to the second IRA. This recharacterization election can be made only if the trustee-to-trustee transfer from the first IRA to the second IRA is made on or before the due date (including extensions) for filing the Individual s Federal income tax return for the Taxable Year for which the contribution was made to the first IRA. For purposes of this section, a conversion that is accomplished through a rollover of a distribution from a Traditional or Regular IRA in a taxable year that, sixty (60) days after the distributions [as described in Code 408(d)(3)(A)(i)], is contributed to a Roth IRA in the next Taxable Year is treated as a contribution for the earlier Taxable Year. 2.9 Election To Recharacterize A Roth IRA Contribution Or A Taxable Year An Individual makes an election by notifying, on or before the date of the transfer, both the trustee of the first Roth IRA and the trustee of the second Roth IRA, that the Individual has elected to treat the contribution as having being made to the second Roth IRA, instead of the first Roth IRA, for Federal tax purposes. The notification of the election must include the following information: the type and amount of the contribution to the first IRA that is to be recharacterized; the date on which the contribution was made to the first Roth IRA and the year for which it was made; directions to the trustee of the first Roth IRA to transfer, in a trustee-to-trustee transfer, the amount of the contribution and net income allocable to the contribution to the trustee of the second Roth IRA; and the name of the trustee of the first Roth IRA and the trustee of the second Roth IRA and any additional information needed to make the transfer. The election and the trustee-to-trustee transfer must occur on or before the due date (including extensions) for filing the Individual s Federal income tax return for the Taxable Year for which the recharacterized contribution was made to the first IRA, and the election cannot be revoked after the transfer. An Individual who makes this election must report the recharacterization, and must treat the contribution as having been made to the second IRA, instead of the first IRA, on the Individual s Federal income tax return for the Taxable Year described in the preceding sentence in accordance with the applicable Federal tax forms and instructions. The election to recharacterize a contribution may be made on behalf of a deceased IRA account holder by his or her executor, administrator, or other person responsible for filing the final Federal income tax return of the decedent under Code 6012(b)(1) Rollover Of Exxon Valdez Settlement Income Qualified Taxpayers who received Qualified Settlement Income may contribute all or part of the amount received to an Eligible Retirement Plan which includes a Roth IRA. The amount contributed cannot exceed $100,000 (reduced by the amount of Qualified Settlement Income contributed to an Eligible Retirement Plan in prior Tax Years) or the amount of Qualified Settlement Income received during the Tax Year. Contributions for the year can be made up to the due date for filing the Individual s income tax return without regard to any extension. Qualified Settlement Income that is contributed to a Roth IRA will be treated as having been rolled over in a direct transfer to the Custodian within sixty (60) days of the distribution. The amount contributed is not included in the Individual s income at the time of the contribution and is not considered to be investment in the contract. The one (1) year waiting period between Rollover Contributions does not apply. For purposes of this paragraph: (a) a Qualified Taxpayer is defined as a plaintiff in the civil action In re Exxon Valdez, No CV (HRH) (Consolidated) (D.Alaska), or the Beneficiary of the estate of a plaintiff who acquired the right to receive Qualified Settlement Income and who is the Spouse or immediate relative of that plaintiff; and (b) Qualified Settlement Income is defined as any interest and punitive damage awards which are otherwise includible in income and received in connection with civil action In re Exxon Valdez, No CV (HRH) (Consolidated) (D.Alaska) (whether pre or post-judgment and whether related to a settlement or judgment). Qualified Settlement Income can be received as periodic payments or as a lump sum. For information regarding the reporting of Qualified Settlement Income, see IRS Publication Excess Contribution If the amount contributed by an Individual exceeds the maximum contribution allowed with respect to a Taxable Year, the Individual must notify the Custodian to distribute to the Individual the excess contribution, together with any investment earnings on that amount. If an excess is not corrected by the tax filing deadline (including extensions) for the year during which the excess contribution was made, such excess contribution may be applied, on a year-by-year basis, against the annual limit for regular Roth IRA contributions. However, in order to "carry over" the excess contribution and treat it as a contribution made for a subsequent year, the Individual must meet the eligibility 8

15 requirements for the subsequent year. In addition, the Individual is subject to the six percent (6%) excise tax for the initial year and each subsequent year until the excess is used up. The provisions under Code 408(d)(5) for Traditional or Regular IRAs (correcting excesses after the filing deadline) and under Code 219(f)(6) for Traditional or Regular IRAs (carrying over excesses to a subsequent year) do not apply to Roth IRAs. The Individual must notify the Custodian of the excess contribution, in writing, before the date on which the Individual files, or is required to file, his or her income tax return for the Taxable Year for which the excess contribution was made Military Death Gratuities And Servicemembers Group Life Insurance (SGLI) Payments Individuals who received a military death gratuity or SGLI payment with respect to a death from injury that occurred after October 6, 2001, may contribute (roll over) all or part of the amount received to this Roth IRA. The contribution will be treated as a Qualified Rollover Contribution. The amount rolled over to the Roth IRA cannot exceed the total amount received, reduced by any part of that amount that was contributed to a Coverdell ESA or another Roth IRA. Any military death gratuity or SGLI payment contributed to a Roth IRA is disregarded for purposes of the one (1) year waiting period between rollovers. This rollover must be completed before the end of the one (1) year period beginning on the date the Individual received the payment. The amount contributed to the Roth IRA is treated as part of the Individual s cost basis and is not taxable when distributed Rollover Of Airline Payments If an Individual is a Qualified Airline Employee as defined below, he or she may contribute any portion of an airline payment received to this Roth IRA within 180 days from the date the payment is received by the Individual. The contribution will be treated as a Qualified Rollover Contribution and the Modified AGI limits that generally apply to Roth IRA rollovers will not apply to airline payments. The rollover contribution is included in income to the extent it would be included in income if it were not part of the rollover contribution. Any reduction in the airline payment amount on account of employment taxes shall be disregarded when determining the amount that may be contributed to this Roth IRA. An airline payment is any payment of money or other property that is paid to a Qualified Airline Employee from a commercial airline carrier. The payment must be made both under the approval of an order of Federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and in respect of the Qualified Airline Employee s interest in a bankruptcy claim against the airline carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. An airline payment amount shall not include any amount payable on the basis of the carrier s future earnings or profits. A Qualified Airline Employee is an employee or former employee of a commercial airline carrier who was a participant in a qualified defined benefit plan maintained by the carrier which was terminated or became subject to restrictions under Section 402(b) of the Pension Protection Act of Timing Of Contributions An Individual must make his or her contribution for a Taxable Year either during such year or within the time period prescribed by law for filing the Individual s Federal income tax return for such Taxable Year without extensions. ARTICLE III INVESTMENT OF ACCOUNT 3.1 Maintenance Of An Individual s IRA The Sponsor will establish and maintain a Roth IRA in the Individual s name under this document. The Individual s Account will be administered separately from any other IRA and the assets of the Individual s Roth IRA will not be commingled with the assets of any other IRA, except in a common trust fund or common investment fund as described in Code 408(a)(5). 3.2 Investment Options Permissible investment alternatives may include but are not limited to stocks, bonds, money market instruments, savings accounts, certificate of deposit, mutual funds, (including funds for which the Sponsor, or any of the Sponsor s affiliates serve as investment advisor), obligations issued or guaranteed by the United States, or in any other investment alternative available for acquisition through the Sponsor in its regular course of business and approved by the Sponsor for investment through this IRA Account. Notwithstanding the above, the Sponsor reserves the right to limit the investment vehicles available to include securities, savings accounts or certificate of deposits issued by the 9

16 Sponsor and/or any of the Sponsor's affiliates. The Code prohibits the Sponsor from investing any part of a Roth IRA in life insurance contracts or in collectibles. Collectibles include but are not limited to, art works, rugs antiques, metals, gems, stamps, alcoholic beverages, and certain other tangible personal property. Investment in gold, platinum and silver coins issued under the laws of the U.S. government or any state, or gold, silver, platinum, or palladium bullion are not considered collectibles and are permitted as an investment. The Individual may direct the Sponsor to transfer all or part of the Individual s Roth IRA to an IRS approved group or collective trust established to permit the pooling of assets of separate pension and profit-sharing trusts described at Code 401(a) and 501(a). The commingling of assets of the Individual IRA with assets of other qualified trusts is specifically authorized, and to the extent of the investment of the Individual's Roth IRA is such a group or collective trust shall be considered to be a part of this Plan. The Sponsor will exercise all ownership rights with respect to the investments of the Individual's Roth IRA upon the Individual s instructions. These activities include holding any investments and collecting investment income. 3.3 Brokerage Account The Individual may enter into a separate brokerage account agreement with the Sponsor. Under the terms of that agreement, the Individual shall have the right to invest in any investment permitted under the brokerage account agreement which is incorporated by reference into this document. 3.4 Directed Investments The Individual or the Individual s duly authorized representative may delegate investment management of all or a portion of the Individual s Account to an Investment Manager, agent or attorney-in-fact, including but not limited to a division or affiliate of the Sponsor, by notifying the Sponsor in writing on a form acceptable to the Sponsor of such delegation, including the name of the person or persons to whom such responsibility is delegated and the assets with respect to which such Investment Manager, agent or attorney-in-fact will direct. The Sponsor shall follow the directions of such Investment Manager, agent or attorney-in-fact. The Individual s written instructions regarding the retention of investment management authority, the appointment of an Investment Manager, or the delegation of investment management responsibility to the Sponsor will remain in effect until revoked or amended in writing. The Sponsor is not responsible for the propriety of any directed investment and will not be required to consult with or advise the Individual regarding the quality of the investment of any directed investment. 3.5 Default Provision If the Individual does not delegate in writing investment management responsibility to either an Investment Manager, or to the Sponsor, the Individual will be responsible for the investment of assets in the Individual s Roth Account. 3.6 Nonforfeitability The entire amount in the Individual s Roth IRA belongs to the Individual, which means that benefit is nonforfeitable at all times. However, the Individual may not pledge any part of the Individual's Roth IRA as security for a loan nor can the Individual assign, transfer, appropriate, encumber, commute, or anticipate the Individual's IRA. The Individual's Roth Account is also protected from legal process to levy upon, garnish, or attach for payment of any claim against the Individual except as may be provided by law. 3.7 Transfers Incident To Divorce All or any portion of the Individual s interest in the Roth IRA may be transferred to a former Spouse pursuant to a divorce decree or written incident to divorce as provided in Code 408(d)(6), in which event the transferred portion of the Roth IRA shall be held as a separate IRA for the benefit of such Spouse in accordance with the terms and conditions of this Roth IRA Custodial Account Agreement. 3.8 Prohibited Transactions Generally, a prohibited transaction is any improper use of an IRA. Examples include borrowing money from an IRA Account or selling property to the IRA. If an Individual engages in a prohibited transaction, the IRA will lose its tax-exempt status, and the entire value of the Account will be included in the Individual s gross income. Additionally if the IRA is disqualified prior to attainment of age 59½, the Individual may be required to pay the 10% premature distribution penalty tax. Pledging a Roth IRA as security for a loan will cause the portion pledged to be treated as a distribution to the Individual, includible in gross income and subject to the 10% additional tax on early distributions if the Individual is under age 59½. 10