Disclosure Statement

Transcription

1 Disclosure Statement The following information is the Disclosure Statement required by federal tax regulations. You should read this Disclosure Statement, the Custodial Account Agreement and the prospectus for the funds in which your GuideStone Funds TM Individual Retirement Account (IRA) contributions will be invested. Revocation of your IRA You have the right to revoke your GuideStone Funds IRA and receive the entire amount of your initial contribution by notifying GuideStone Trust Services TM (an affiliate of GuideStone Financial Resources TM of the Southern Baptist Convention), the custodian of your GuideStone Funds IRA, in writing within seven days of establishment of your IRA. If you revoke your IRA within seven days, you are entitled to a return of the entire amount paid by you without adjustment for such items as sales commissions, administrative expenses or fluctuations in market value. If you decide to revoke your IRA, notice should be delivered or mailed to: First-Class Mail : GuideStone Funds Attn: GuideStone Funds IRA P.O. Box 9834 Providence, RI Overnight: GuideStone Funds Attn: GuideStone Funds IRA c/o BNY Mellon Investment Servicing (US) Inc Computer Drive Westborough, MA This notice should be signed by you and include the following: 1. The date 2. A statement that you elect to revoke your GuideStone Funds IRA 3. Your GuideStone Funds IRA account number 4. The date your GuideStone Funds IRA was established 5. Your signature and your printed or typed name Mailed notice will be deemed given on the date that it is postmarked if it is properly addressed and deposited either in the United States mail, firstclass postage prepaid, or with an IRS-approved overnight service. This means that, if you mail your notice, it must be postmarked on or before the seventh day after your GuideStone Funds IRA was established. A revoked IRA will be reported to the IRS and the depositor on Forms 1099-R and Your Traditional IRA You have opened a GuideStone Funds IRA, which is a Traditional IRA for the exclusive benefit of you and your beneficiaries, created by a written instrument (the Custodial Account Agreement). The following requirements apply to your GuideStone Funds IRA: 1. Contributions, transfers and rollovers may be made only in cash by check, draft or other form acceptable to GuideStone Trust Services. 2. The custodian must be a bank or savings and loan association or any person who has the approval of the IRS to act as custodian. 3. No part may be invested in life insurance contracts. 4. Your interest must be non-forfeitable. 5. The assets of the custodial account may not be mixed with other property except in a common investment fund. 6. You must begin receiving distributions from your account no later than April 1 of the year following the year in which you become 70 ½ years old, and distributions must be completed over a period that is no longer than the joint life expectancy of you and your beneficiary. 7. You are not eligible to open a Traditional IRA if you are age 70 ½ by the end of the year. You may not contribute to a Traditional IRA for any year if you will be age 70 ½ by the end of that year. 8. Your IRA is exempt from federal income tax pursuant to section 408(e) of the Internal Revenue Code. Contributions The maximum allowable contribution to your IRAs (deductible, non-deductible and Roth) for each tax year is the lesser of (a) $5,500 or (b) 100% of your compensation or earnings from self-employment. If your spouse is not employed or earns less than you earn, your spouse may also contribute to an IRA. The maximum contribution to your spouse s IRA for each tax year is the lesser of (a) $5,500 or (b) the combined compensation of both spouses, minus the dollar amount of the IRA contribution made by the compensated (or more highly compensated) spouse. The total combined contribution to each individual s IRAs (deductible, non-deductible and Roth) cannot exceed these limits. The contribution limit is $5,500 for 2017 and is indexed to the cost of living after For individuals who have reached the age of 50 before the close of the tax year, the contribution limit is increased to $6,500. If you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: 1. $5,500 ($6,500 if you are age 50 or older), or 2. The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts: a. Your spouse s IRA contribution for the year to a Traditional IRA. b. Any contributions for the year to a Roth IRA on behalf of your spouse GuideStone Financial Resources 05/17

2 This means that the total combined contributions that can be made for the year to your IRA and your spouse s IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). These limits are indexed to the cost of living after Generally, compensation is what you earn from working. Compensation includes all of the following (even if you have more than one type): Wages, salaries, etc. Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. Commissions. An amount you receive that is a percentage of profits or sales price is compensation. Self -employment income. If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. Alimony and separate maintenance. For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. Nontaxable combat pay. If you were a member of the U.S. Armed Forces, compensation includes any nontaxable combat pay you received. This amount should be reported in box 12 of your Form W-2 with code Q. If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions you received. A qualified reservist distribution is any distribution with respect to which the following requirements are met: (1) you were ordered or called to active duty after September 11, 2001, (2) you were ordered or called to active duty for a period of more than 179 days or for an indefinite period because you are a member of a reserve component, and (3) the distribution is made no earlier than the date of the order or call to active duty and no later than the close of the active duty period. You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. Your qualified reservist repayments cannot be more than your qualified reservist distributions. You cannot make these repayment contributions later than the date that is two years after your active duty period ends. You cannot deduct qualified reservist repayments. The term reserve component means the Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. If you repay a qualified reservist distribution, include the amount of the repayment with non-deductible contributions on line 1 of Form Contributions can be made to your Traditional IRA for each year that you receive compensation and have not reached age 70 1/2. For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. Contributions can resume for any years that you qualify. Contributions can be made to your Traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. Contributions cannot be made to your Traditional IRA for the year in which you reach age 70 1/2 or for any later year. You attain age 70 1/2 on the date that is six calendar months after the 70th anniversary of your birth. If an amount is contributed to your Traditional IRA between January 1 and the due date for filing your return, you should tell the custodian which year (the current year or the previous year) the contribution is for. If you do not tell the custodian which year it is for, the custodian will assume, and report to the IRS, that the contribution is for the current year (the year the custodian received it). Excess contributions Amounts contributed to your GuideStone Funds Traditional IRA in excess of the allowable limit will be subject to a non-deductible excise tax of 6% for each year until the excess is used up as an allowable contribution (in a subsequent year) or returned to you. The 6% excise tax on excess contributions will not apply if the excess contribution and earnings allocable to it are distributed by the due date for your federal income tax return, including extensions. If such a distribution is made, only the earnings are considered taxable income for the tax year in which the excess was contributed to the IRA. The return of earnings may also be subject to the 10% excise tax on early distributions discussed below. You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. An IRS Form 1099-R will be issued for the year in which the distribution occurred, not the year in which the excess contribution was made. The Form 1099-R applies to amounts removed during the period January 1 through and including the due date of your federal income tax return for the prior tax year. Income tax deduction Your contribution to a Traditional IRA may be deductible on your federal income tax return. However, there is a phase-out of the IRA deduction if you are an active participant in an employer-sponsored retirement plan. For the 2017 tax year, the IRA deduction is reduced proportionately as modified adjusted gross income increases from $62,000 to $72,000 for a single individual, $99,000 to $119,000 for a married couple filing a joint return, or $0 to $10,000 for a married individual who is an active participant and files a separate return and lives with his or her spouse at any time during the year. A deductible IRA contribution can be made to your spouse s IRA even if you are an active participant in an employer-sponsored retirement plan if your joint modified adjusted gross income for the tax year does not exceed $186,000 for The IRA deduction is reduced proportionally as your joint modified adjusted gross income increases from $186,001 to $196,000 for 2017.

3 Income tax deduction (continued) In general, the IRA deduction is phased out at a rate of $200 per $1,000 of modified adjusted gross income in excess of the phase-out amount. When calculating your reduced IRA deduction limit, you always round to the next highest $10 if the result is not a multiple of $10. If your modified adjusted gross income is within the phase-out range and your reduced deduction limit is more than $0 but less than $200, you are permitted to deduct up to $200 of your IRA contribution. Modified adjusted gross income is determined prior to adjustments for personal exemptions and itemized deductions. For purposes of determining the Traditional IRA deduction, modified adjusted gross income is modified to take into account deductions for IRA contributions, taxable benefits under the Social Security Act and the Railroad Retirement Act, and passive loss limitations under Internal Revenue Code Section 86. Tax credit You may be eligible for a federal income tax credit with respect to your IRA contributions. You will receive a credit equal to a percentage of your eligible retirement plan contributions, which include all contributions to a Traditional or Roth IRA as well as elective deferral contributions and voluntary after-tax contributions under a 401(k) plan, a 403(b) plan, a 457 plan, a SIMPLE IRA, or a SEP-IRA, net of certain retirement account distributions. The maximum amount of eligible retirement plan contributions for which the credit may be taken is $2,000. The availability of the tax credit and the percentage of eligible retirement plan contributions subject to the tax credit are subject to MAGI limits for 2016 and 2017 as follows: Modified Adjusted Gross Income 2016 Joint Filers Heads of Household All Other Filers Credit Rate $0 $37,000 $0 $27,750 $0 $18,500 50% $37,001 $40,000 $27,751 $30,000 $18,501 $20,000 20% $40,001 $61,500 $30,001 $46,125 $20,001 $30,750 10% Over $61,500 Over $46,125 Over $30,750 0% Modified Adjusted Gross Income 2017 Joint Filers Heads of Household All Other Filers Credit Rate $0 $37,000 $0 $27,750 $0 $18,500 50% $37,001 $40,000 $27,751 $30,000 $18,501 $20,000 20% $40,001 $62,000 $30,001 $46,500 $20,001 $31,000 10% Over $62,000 Over $46,500 Over $31,000 0% All figures shown in the tables above are for 2016 and These figures are indexed to the cost of living after Taxation of distributions The income of your GuideStone Funds IRA is not taxed until the money is distributed to you. Distributions are taxable as ordinary income when received, except that the amount of any distribution representing a return of non-deductible contributions or the return of an excess contribution is not taxed. In general, you may roll over a distribution from another IRA, an eligible rollover distribution from your employer-sponsored retirement plan or distributions from certain tax-deferred annuities or accounts. If a distribution is rolled over, i.e., deposited to your GuideStone Funds IRA within 60 calendar days of receipt, the amount rolled over is not taxable. The IRS enforces the 60-day time limit strictly. You may roll over a portion of a distribution, in which case the remainder that is otherwise taxable will be subject to tax. The IRS requires 20% of the taxable portion of any eligible rollover distribution from your employer-sponsored retirement plan to be withheld for federal income tax unless your distribution is transferred in a direct rollover to an eligible retirement plan such as another employer-sponsored retirement plan or IRA. The rules regarding rollovers are complex, and you should consult a competent tax advisor prior to rolling over all or part of a distribution. If you make a tax-free rollover of any part of a distribution from a Traditional IRA, you cannot, within a one-year period, make a tax-free rollover of any later distribution from any IRA. You also cannot make a tax-free rollover of any amount distributed, within the same one year period, from the Traditional IRA into which you made the tax-free rollover. Note that this rule does not apply to any direct transfer between IRAs. Consult IRS Publication 590-B for more information pertaining to rollover contributions. Note: You may not roll over after-tax contributions to a 403(b) program or 457 plan. You may want to roll over a distribution from an employer s retirement plan to a separate IRA in order to preserve certain tax treatments. The rules regarding tax-free rollovers are complex and subject to frequent change; you should consult a professional tax advisor if you are considering such a rollover. Conversions You may also convert all or a portion of your Traditional IRA to a Roth IRA. A conversion is a type of distribution and is not tax-free. Distributions are taxable as ordinary income when received, except that the amount of any distribution representing the return of non-deducted contributions is not taxed. The 10% penalty tax on early distributions does not apply to conversion amounts unless an amount attributable to a conversion is distributed from the Roth IRA prior to five years from the date of the conversion.

4 A conversion is reported as a distribution from the Traditional IRA (IRS Form 1099-R) and a conversion contribution to the Roth IRA (IRS Form 5498). The rules regarding conversions to Roth IRAs are complex, and you should consult a competent tax advisor prior to a conversion. IRA Conversion forms are available from GuideStone Trust Services and should be used for all conversion requests. Recharacterization of a conversion (correction process) You may correct a conversion made in error by recharacterizing the conversion. A conversion is recharacterized by transferring the conversion amount plus allocable earnings to a Traditional IRA. The correction must take place prior to the due date, including extensions, for filing your federal income tax return for the tax year in which the conversion was originally made. A recharacterized conversion may be converted back to a Roth IRA; however, limitations may apply. Beginning in the year 2000, assets that have been recharacterized back to a Traditional IRA cannot be reconverted to a Roth IRA in the same tax year or within 30 days. A recharacterized conversion is reported as a distribution from the Roth IRA (IRS Form 1099-R) and a recharacterization contribution to the Traditional IRA (IRS Form 5498) for the tax year in which the recharacterization occurs. The rules regarding recharacterization are complex, and you should consult a competent tax advisor prior to any recharacterization or reconversion. Distributions under $10 will not be reported to you on IRS Form 1099-R after December 31, 1996, as allowed under IRS regulations. However, you must still report these distributions to the IRS on IRS Form 1040 as well as other forms that may be required to properly file your tax return. Recharacterization of contributions If you are eligible to contribute to a Roth IRA, all or part of a contribution you make to your Traditional IRA, along with allocable earnings or losses, may be recharacterized and treated as if made to your Roth IRA on the date the contribution was originally made to your Traditional IRA. Recharacterization of a contribution is irrevocable and must be completed on or before the due date, including extensions, for filing your federal income tax return for the tax year in which the contribution was originally made. A recharacterized contribution is reported as a distribution from the first IRA (IRS Form 1099-R) and a recharacterization contribution to the second IRA (IRS Form 5498) for the tax year in which the recharacterization occurs. The rules regarding recharacterization are complex, and you should consult a competent tax advisor prior to any recharacterization. IRA Recharacterization forms are available from GuideStone Trust Services and should be used for all recharacterization requests. Penalty tax on certain transactions Excess contributions If you make an excess contribution to your IRA and it is not corrected on a timely basis, an excise tax of 6% is imposed on the excess amount. This tax will apply each year to any part or all of the excess that remains in your account (see Excess contributions earlier). Early distributions Your receipt or use of any portion of your account (excluding any amount representing a return of non-deducted contributions) before you attain age is considered an early or premature distribution. The distribution is subject to a penalty tax equal to 10% of the distribution unless one of the following exceptions applies to the distribution. The distribution is: 1. Due to your death 2. Made because you became totally and permanently disabled 3. Used specifically for deductible unreimbursed medical expenses that, generally, exceed 10% of your adjusted gross income 4. Used for health insurance costs due to your unemployment 5. Used for qualified higher education expenses defined in section 529(e)(3) of the Internal Revenue Code 6. Used toward the expenses of buying, building or rebuilding a first home up to a lifetime limit of $10, Part of a scheduled series of substantially equal payments over your lifetime or over the joint life expectancy of you and a beneficiary. If you request a distribution in the form of a series of substantially equal payments, and you modify the payments before five years have elapsed and before attaining age , the penalty tax will apply retroactively to the year payments began through the year of such modification 8. Required because of an IRS levy 9. A qualified reservist distribution The 10% penalty tax is in addition to any federal income tax that is owed at distribution. For more information on the 10% penalty tax and the exceptions listed above, consult IRS Publication 590-B. Required distributions You are required to begin receiving minimum distributions from your IRA no later than April 1 following the calendar year in which you reach the age of The distribution may be paid either in installments or in a lump sum. The installments may be paid over your lifetime or over the joint and last survivor life expectancy of you and your designated beneficiary. If the amount distributed during a taxable year is less than the minimum amount required to be distributed, you will be subject to a penalty tax equal to 50% of the difference between the amount distributed and the amount required to be distributed. A Required Distribution Election form is available from GuideStone Trust Services and should be obtained and used to make your elections for your required minimum distribution request. Additional information on distributions A Traditional IRA Withdrawal Authorization form is available from GuideStone Trust Services and should be obtained and used to request any distribution from your IRA. You must file Form 5329 for any year in which you must pay an early distribution or penalty tax.

5 Distributions due to death If, prior to your death, you have not started taking your required distributions and you properly designated a beneficiary(ies), the entire value of your IRA must be distributed to your beneficiary(ies) within five years after your death unless the designated beneficiary(ies) elects in writing, no later than September 30 of the year following the year in which you die, to take distributions over their life expectancy. If, prior to your death, you have started taking your required distributions and you properly designated a beneficiary(ies), distributions following your death must continue at least as rapidly as under your required distribution election. After your death, your designated beneficiary(ies) may name a subsequent beneficiary(ies). Any subsequent beneficiary(ies) must take distributions at least as frequently as the original designated beneficiary(ies). If your designated beneficiary is your spouse, then he/she may elect to either treat the IRA as his or her own or to roll over the funds into his or her own IRA in addition to the above options. If you do not properly designate a beneficiary, or all designated beneficiaries have predeceased you, then, if you are married, the distribution will be made to your spouse, or if you are single, the distribution will be made to your estate. Consult IRS Publication 590-B or a competent estate planning advisor for a complete discussion of rules governing distributions due to death. A Traditional IRA Withdrawal Authorization form is available from GuideStone Trust Services and should be obtained and used to request any distribution from your IRA. Prohibited transactions If you or your beneficiary engage(s) in any prohibited transaction (such as any sale, exchange, borrowing or leasing of any property between you and your IRA or any other interference with the independent status of the account), the account will lose its exemption from tax and be treated as having been distributed to you. The taxable value of the entire account will be includable in your gross income. If you are under age , you would also be subject to the 10% penalty tax on early distributions. If you or your beneficiary use (pledge) all or any part of your IRA as security for a loan or invest any portion of your IRA in prohibited collectibles, then the portion so pledged, or invested, will be treated as if distributed to you and will be taxable to you as ordinary income and subject to a 10% penalty tax if you have not attained age during the year in which you make such a pledge or such investment. Income tax withholding GuideStone Trust Services is required to withhold federal income tax from the taxable portion of any distribution from your IRA to you at the rate of 10% unless you choose not to have income tax withheld. You may opt out of withholding by advising GuideStone Trust Services, in writing, prior to the distribution, that you do not want income tax withheld from the distribution. This election may be made on IRS Form W-4P or any other form acceptable to GuideStone Trust Services. If you opt out of income tax withholding, you may direct GuideStone Trust Services to withhold an additional amount of income tax in excess of 10% but not more than 90%. Additional information For more detailed information, you may obtain IRS Publication 590-A, Contributions to Individual Retirement Accounts (IRAs) or IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) from any district office of the IRS or by calling TAX-FORM. Any IRA transaction may have tax consequences; consult your tax advisor to obtain information about the tax consequences in connection with your particular circumstances. Information about your investments A mutual fund investment involves investment risks, including possible loss of principal. In addition, growth in the value of your account is neither guaranteed nor projected due to the characteristics of a mutual fund investment. Detailed information about the shares of each mutual fund available for investment by your GuideStone Funds IRA must be furnished to you in the form of a prospectus. The method for computing and allocating annual earnings is set forth in the fund prospectus. (Refer to the fund prospectus sub-section entitled DISTRIBUTIONS. ) If you made an initial contribution of $1,000 on the first day of a calendar year and no further investment during that year, your contribution would also be subject to certain costs and expenses, which would reduce any yield you might obtain from your investment. (Refer to the FEES & EXPENSES section of the fund prospectus.) For further information regarding expenses, earnings and distributions, see the mutual fund s financial statements, prospectus and/or Statement of Additional Information. Should the fund in which you are invested close and the prospectus for said fund not specify a successor fund, your shares of said fund will be liquidated and the proceeds will be used to purchase shares of the Money Market Fund in the same fund family, if available. Fees and charges The charges in connection with your GuideStone Funds IRA are set forth in the application. GuideStone Trust Services may also charge a service fee in connection with any distribution from your IRA. IRS-approved form Your GuideStone Funds Traditional IRA is the IRS s model custodial account contained in IRS Form 5305-A pursuant to which the IRS has approved the form of your IRA. Certain additions have been made in Article VIII of the form. By following this form, your GuideStone Funds Traditional IRA meets the requirements of the Internal Revenue Code. However, the IRS has not endorsed the merits of the investments allowed under the IRA. 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. This form cannot be used in connection with Roth IRAs.