INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
AND CUSTODIAL AGREEMENT
WARBURG PINCUS FUNDS
DISCLOSURE STATEMENT
ESTABLISHING YOUR IRA
This Disclosure Statement contains information about your
Individual Retirement Custodial Account with State Street Bank and Trust
Company as Custodian. Your IRA gives you several tax benefits. Earnings on
the assets held in your IRA are not subject to federal income tax until
withdrawn by you. You may be able to deduct all or part of your IRA
contribution on your federal income tax return. State income tax
treatment of your IRA may differ from federal treatment; ask your state tax
department or your personal tax advisor for details.
All IRAs must meet certain requirements. Contributions generally
must be made in cash. The IRA trustee or custodian must be a bank or other
person who has been approved by the Secretary of the Treasury. Your
contributions may not be invested in life insurance or be commingled with
other property except in a common trust or investment fund. Your
interest in the account must be nonforfeitable at all times. You may
obtain further information on IRAs from any district office of the Internal
Revenue Service.
You may revoke a newly established IRA at any time within seven
days after the date on which you receive this Disclosure Statement.
An IRA established more than seven days after the date of your receipt
of this Disclosure Statement may not be revoked.
To revoke your IRA, mail or deliver a written notice of revocation
to the Custodian at the address which appears at the end of this
Disclosure Statement. Questions pertaining to the revocation of your IRA should
be directed to our IRA department by calling toll-free ▇▇▇-▇▇▇-▇▇▇▇. Mailed
notice will be deemed given on the date that it is postmarked (or, if sent
by certified or registered mail, on the date of certification or
registration). If you revoke your IRA within the seven-day period, you are
entitled to a return of the entire amount you contributed into your IRA,
without adjustment for such items as sales charges, administrative expenses or
fluctuations in market value.
FEES AND EXPENSES
CUSTODIAN'S FEES
The following fee will be imposed by the Custodian for maintaining your
IRA.
Annual Custodial Fee Per IRA $10
The following are additional fees that may be imposed by the Custodian
for maintaining your IRA.
One-Time Fee for Lump-Sum
Withdrawal $10
Fee for Periodic Withdrawal
(Per Withdrawal) $2
GENERAL FEE POLICIES
(TM) Fees may be paid by you directly or the Custodian may deduct
them from your IRA.
(TM) Annual $10 Custodial Fee will be waived if your Warburg
▇▇▇▇▇▇ ▇▇▇, with State Street Bank and Trust Company as the
Custodian, has a balance of $10,000 or more at the end of the
year.
(TM) Fees (including the Custodial Fee waiver) may be changed upon 30
days written notice to you.
(TM) The full annual Custodial Fee will be charged for any
calendar year during which you have an IRA with us. This fee is
not prorated for periods of less than one full year. The fee
must be received by December 31 of each year or it will be
automatically deducted from your account.
(TM) Termination fees are charged when your account is closed
whether the funds are distributed to you or transferred to a
successor custodian or trustee.
(TM) The Custodian may charge you for its reasonable expenses for
services not covered by its fee schedule.
OTHER CHARGES
(TM) There may be sales or other charges associated with the
purchase or redemption of shares of a Fund in which your IRA is
invested. Be sure to read carefully the current prospectus
of any Fund you are considering as an investment for your
IRA for a description of applicable charges.
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR AN IRA?
You are eligible to establish and contribute to an IRA for a year if:
(TM) You received compensation (or earned income if you are
self-employed) during the year for personal services you
rendered. If you received taxable alimony, this is treated like
compensation for IRA purposes.
(TM) You did not reach age 701/2 during the year.
CAN I CONTRIBUTE TO AN IRA FOR MY SPOUSE?
For each year before the year when your spouse attains age 701/2, you
can contribute to a separate IRA for your spouse, regardless of whether
your spouse had any compensation or earned income in that year. This is
called a "spousal IRA." To make a contribution to a spousal IRA for your
spouse, you must file a joint tax return and your spouse must either have no
compensation or earned income, or must elect to be treated as having no
compensation or earned income for that year. For a spousal IRA, your spouse
must set up a different IRA, separate from yours, to which you contribute.
CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO AN IRA?
You may make a contribution to your existing IRA or establish a new
IRA for a taxable year by the due date (not including any extensions) for
your federal income tax return for the year. Usually this is April 15
of the following year.
HOW MUCH CAN I CONTRIBUTE TO MY IRA?
For each year when you are eligible (see above), you can contribute
up to the lesser of $2,000 or 100% of your compensation (or earned income, if
you are self-employed).
However, under the tax laws, all or a portion of your contribution may not be
deductible.
If you and your spouse have spousal IRAs, you may contribute each year up to a
maximum of $2,250 from your compensation (or earned income)
to both spousal IRAs. You may divide the contribution between the spousal
IRAs as you wish, as long as you do not contribute more than $2,000 to either
of the spousal IRAs.
HOW DO I KNOW IF MY CONTRIBUTION IS TAX-DEDUCTIBLE?
The deductibility of your contribution depends upon whether you are (or
your spouse is) an active participant in any employer-sponsored retirement
plan. If neither you nor your spouse is an active participant, the
entire IRA contribution is deductible.
If either you or your spouse is an active participant, your IRA
contribution may still be completely or partly deductible on your tax
return. This depends on the amount of your income.
HOW DO I DETERMINE MY OR MY SPOUSE'S "ACTIVE PARTICIPANT" STATUS?
Your IRS Form W-2 (or your spouse's W-2) should indicate if you were an
active participant in an employer-sponsored retirement plan for a year. If you
have a question, you should ask your employer or the plan administrator.
In one situation, your spouse's "active participant" status will not
affect the deductibility of your contributions to your IRA. This rule applies
only if you and your spouse file separate tax returns for the taxable year
and you lived apart at all times during the taxable year.
WHAT ARE THE DEDUCTION RESTRICTIONS?
The portion of your contribution that is deductible depends upon your
filing status and the amount of your modified adjusted gross income ("AGI").
The following chart shows the deduction rules.
IF YOUR MODIFIED IF YOU ARE COVERED BY A RETIREMENT PLAN AT WORK
AGI1 IS: AND YOUR FILING STATUS IS:
(TM) Single (TM) Married filing (TM) Married filing
(TM) Head of jointly (even if separately2
household your spouse is not
covered by a plan
at work)
(TM) Qualifying
widow(er)
AT BUT LESS
LEAST THAN YOU CAN TAKE YOU CAN TAKE YOU CAN TAKE
$-0- $10,000 Full deduction Full deduction Partial deduction
$10,000 $25,000 Full deduction Full deduction No deduction
$25,000 $35,000 Partial deduction Full deduction No deduction
$35,000 $40,000 No deduction Full deduction No deduction
$40,000 $50,000 No deduction Partial deduction No deduction
$50,000 or over No deduction No deduction No deduction
If Your Modified If You Are Not Covered by a Retirement Plan at Work
AGI1 Is: And Your Filing Status Is:
(TM) Married filing (TM) Single (TM) Married filing (TM) Married filing
jointly (and (TM) Head of jointly or separately (even if
your spouse is household separately (and your spouse is
covered by a plan your spouse is not covered by a plan
at work) covered by a plan at work)3
at work)
AT BUT LESS
LEAST THAN YOU CAN TAKE YOU CAN TAKE YOU CAN TAKE
$-0- $10,000 Full deduction
$10,000 $25,000 Full deduction
$25,000 $35,000 Full deduction Full deduction Full deduction Full deduction
$35,000 $40,000 Full deduction
$40,000 $50,000 Partial deduction
$50,000 or over No deduction
_________________
1 Modified AGI (adjusted gross income) is: (1) for IRS Form 1040A-the amount
on line 14 increased by any excluded Series ▇▇ ▇▇▇▇ interest shown on IRS
Form 8815, Exclusion of interest from Series EE U.S. Savings Bonds issued after
1989, or (2) for IRS Form 1040-the amount on line 31, figured without
taking into account any IRA deduction or any foreign earned income
exclusion and foreign housing exclusion (deduction), or any Series ▇▇ ▇▇▇▇
interest exclusion from IRS Form 8815.
2 If you did not live with your spouse at any time during the year, your
filing status is considered, for this purpose, as Single (therefore your IRA
deduction is determined under the "Single" column).
3 You are entitled to the full deduction only if you did not live with your
spouse at any time during the year. If you did live with your spouse during
the year, you are, for this purpose, treated as though you are covered
by a retirement plan at work (therefore, your IRA deduction is
determined under the "Married Filing Separately" column in the "If You Are
Covered by a Retirement Plan..." section of the chart).
HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTIAL DEDUCTION"
RANGE?
If your modified AGI falls in the partial deduction range, you
must calculate the portion of your contribution that is deductible. To do
this, multiply your contribution by a fraction. The numerator is the amount
by which your modified AGI exceeds the lower limit of the partial
deduction range ($25,000 if single, or $40,000 if married filing jointly).
The denominator is $10,000. Subtract this from your contribution and then
round up to the nearest $10. The deductible amount is the greater of the
amount calculated or $200 (provided you contributed at least $200). If your
contribution was less than $200, then the entire contribution is deductible.
For example, assume that you make a $2,000 contribution to your IRA
in a year in which you are an active participant in your employer's
retirement plan. Also assume that your modified AGI for the year is $47,555
and you are married, filing jointly. You would calculate the deductible
portion of your contribution this way:
1) The amount by which your modified AGI exceeds the lower limit of
the partial deduction range:
($47,555 - $40,000) = $7,555
2) Divide this by $10,000:
$7,555
-------
$10,000 = 0.7555
3) Multiply this by your contribution:
0.7555 x $2,000 = $1,511
4) Subtract this from your contribution:
($2,000 - $1,511) = $489
5) Round this up to the nearest $10: = $490
6) Your deductible contribution is the greater
of this amount or $200.
Even though part or all of your contribution is not deductible, you
may still contribute to your IRA up to the limit on contributions ($2,000, or
$2,250 for spousal IRAs). When you file your tax return for the year,
you must designate the amount of nondeductible IRA contributions for the
year. See IRS Form 8606.
HOW DO I DETERMINE MY MODIFIED AGI?
Modified AGI is your gross income minus those deductions that
are available to all taxpayers even if they don't itemize. Instructions to
calculate your modified AGI are provided with your IRS Form 1040 or 1040A.
WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY IRA?
The maximum contribution you can make to an IRA is $2,000 ($2,250
for spousal IRAs) or 100% of compensation or earned income, whichever is
less. Any amount contributed to the IRA above the maximum is considered
an "excess contribution." The excess is calculated using your contribution
limit, not the deductible limit. An excess contribution is subject to excise
tax of 6% for each year it remains in the IRA.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty.
To do so, you must withdraw the excess and any earnings on the excess before
the due date (including extensions) for filing your federal income tax
return for the year for which you made the excess contribution. A deduction
should not be taken for any excess contribution. Earnings on the amount
withdrawn must also be withdrawn. The earnings must be included in your
income for the tax year for which the contribution was made and may be subject
to a 10% premature withdrawal tax if you have not reached age 591/2.
WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN
DUE DATE?
Any excess contribution withdrawn after the tax return due
date (including any extensions) for the year for which the contribution was
made will be subject to the 6% excise tax. There will be an additional 6%
excise tax for each year the excess remains in your account.
Under limited circumstances, you may correct an excess
contribution after tax filing time by withdrawing the excess contribution
(leaving the earnings in the account). This withdrawal will not be
includible in income nor will it be subject to any premature withdrawal penalty
if (1) your contributions to all IRAs do not exceed $2,250 and (2) you did not
take a deduction for the excess contribution (or you file an amended return,
Form 1040X, which removes the excess contribution).
HOW ARE EXCESS CONTRIBUTIONS TREATED IF NONE OF THE PRECEDING RULES APPLY?
Unless an excess contribution qualifies for the special treatment
outlined above, the excess contribution and any earnings on it withdrawn
after tax filing time will be includible in taxable income and may be subject
to a 10% premature withdrawal penalty. No deduction will be allowed for the
excess contribution for the year in which it is made.
Excess contributions may be corrected in a subsequent year to the
extent that you contribute less than your maximum amount. As the prior excess
contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you
may be able to take an income tax deduction for the amount of excess that was
reduced or eliminated, depending on whether you would be able to take a
deduction if you had instead contributed the same amount.
TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO AN IRA?
Almost all distributions from employer plans or 403(b)
arrangements (for employees of tax-exempt employers) are eligible for rollover
to an IRA. The main exceptions are:
(TM) payments over the lifetime or life expectancy of the participant
(or p articipant and a designated beneficiary);
(TM) installment payments for a period of 10 years or more;
(TM) required distributions starting at age 701/2; and
(TM) payments of employee after-tax contributions.
If you are eligible to receive a distribution from a
tax-qualified retirement plan as a result of, for example, termination of
employment, plan discontinuance, or retirement, all or part of the
distribution may be transferred directly into your IRA. This is a called a
"direct rollover." Or, you may receive the distribution and make a regular
rollover to your IRA within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your IRA.
The maximum amount you may roll over is the amount of
employer contributions and earnings distributed. You may not roll over any
after-tax employee contributions you made to the employer retirement plan. If
you are over age 701/2 and are required to take minimum distributions under the
tax laws, you may not roll over any amount required to be distributed to you
under the minimum distribution rules. Also, if you are receiving periodic
payments over your or your and your designated beneficiary's life
expectancy or for a period of at least 10 years, you may not roll over these
payments. A regular rollover to an IRA must be completed within 60 days after
the distribution from the employer retirement plan to be valid.
NOTE: A QUALIFIED PLAN ADMINISTRATOR OR 403(B) SPONSOR MUST WITHHOLD 20% OF
YOUR DISTRIBUTION FOR FEDERAL INCOME TAXES UNLESS YOU ELECT A DIRECT
ROLLOVER. YOUR PLAN OR 403(B) SPONSOR IS REQUIRED TO PROVIDE YOU WITH
INFORMATION ABOUT DIRECT AND REGULAR ROLLOVERS AND WITHHOLDING TAXES BEFORE
YOU RECEIVE YOUR DISTRIBUTION AND MUST COMPLY WITH YOUR DIRECTIONS TO MAKE A
DIRECT ROLLOVER.
The rules governing rollovers are complicated. Be sure to consult
your tax advisor or the IRS if you have a question about rollovers.
ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO AN IRA, CAN I SUBSEQUENTLY
ROLL OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN?
Yes. Part or all of an eligible distribution received from a
qualified plan may be transferred to another qualified plan through the medium
of an IRA. However, the IRA must have no assets other than those which
were previously distributed to you from the qualified plan. Specifically, the
IRA cannot contain any regular IRA contributions. Also, the new qualified
plan must accept rollovers.
HOW OFTEN CAN I MAKE A REGULAR ROLLOVER FROM MY IRA TO ANOTHER IRA?
You may make a regular rollover from one IRA to another only once
in any 365-day period. This rule applies to each individual IRA.
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY REGULAR CONTRIBUTIONS
IN ONE IRA?
If you wish to make both a regular annual contribution and a
rollover contribution, you may wish to open two separate IRAs by completing
two adoption agreements and two sets of forms. You should consult a tax advisor
before making your regular contribution to the IRA you established with
rollover contributions (or make a rollover contribution to the IRA to which
you make your regular contributions). This is because combining your regular
annual contributions and rollover contributions originating from an employer
plan distribution would prohibit the future rollover of the assets of the
IRA into another qualified plan. If despite this, you still wish to combine a
rollover contribution and the IRA holding your regular contributions, you
should establish the account as an Accumulation IRA on the Adoption Agreement
and make the contributions to that account.
HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS?
Rollover contributions, if properly made, do not count toward
the maximum contribution. Also, rollovers are not deductible and they do not
affect your deduction limits as described above.
INVESTMENTS
HOW ARE MY IRA CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to
your IRA. Investments must be in one or more of the Fund(s) available from
time to time as listed in the Adoption Agreement for your IRA or in an
investment selection form included with your IRA Adoption Agreement. You
direct the investment of your IRA by giving your investment instructions to
the Distributor or Service Company for the Fund(s). Since you control the
investment of your IRA, you are responsible for any losses; neither the
Custodian, the Distributor nor the Service Company has any responsibility
for any loss or diminution in value occasioned by your exercise of investment
control. Transactions for your IRA will generally be effected at the
applicable public offering price or net asset value for shares of the
Fund(s) involved next established after the Distributor or the Service
Company (whichever may apply) receives proper investment instructions from
you; consult the current prospectus for the Fund(s) involved for additional
information.
Before making any investment, read carefully the current prospectus
for any Fund you are considering as an investment for your IRA. The prospectus
will contain information about the Fund's investment objectives and policies,
as well as any minimum initial investment or minimum balance requirements and
any sales, redemption or other charges.
Because you control the selection of investments for your IRA,
the growth in value of your IRA cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY IRA ASSETS?
The tax-exempt status of your IRA will be revoked if you engage in
any of the prohibited transactions listed in Section 4975 of the tax code. The
fair market value of your IRA will be includible in your taxable income in
the year in which such prohibited transaction takes place. The fair market
value of your IRA may also be subject to a 10% penalty tax as a premature
withdrawal if you have not yet reached the age of 591/2.
Any investment in a collectible (for example, rare stamps) by your
IRA is treated as a taxable withdrawal; the only exception involves certain
types of government-sponsored coins.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the
assets in your IRA. Some examples of prohibited transactions are:
(TM) Direct or indirect sale or exchange of property between you and
your IRA.
(TM) Transfer of any property from your IRA to yourself or from
yourself to your IRA.
Your IRA could lose its tax-exempt status if you use all or part
of your interest in your IRA as security for a loan or borrow any money from
your IRA. Any portion of your IRA used as security for a loan will be
taxed as ordinary income in the year in which the money is borrowed. If you are
under age 591/2, this amount will also be subject to a 10% penalty tax as
a premature distribution.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY IRA?
You may withdraw from your IRA at any time. However, withdrawals
before age 591/2 may be subject to a 10% penalty tax in addition to regular
income taxes (see below).
WHEN MUST I START MAKING WITHDRAWALS?
If you have not withdrawn your entire IRA by the April 1 following
the year in which you reach age 701/2, you must make minimum withdrawals in
order to avoid penalty taxes. The minimum withdrawal amount is determined by
dividing the balance in your IRA (or IRAs) by your life expectancy or the
combined life expectancy of you and your designated beneficiary. The minimum
withdrawal rules are complex. Consult your tax advisor for assistance.
The penalty tax is 50% of the difference between the minimum
withdrawal amount and your actual withdrawals during a year. The IRS may
waive or reduce the penalty tax if you can show that your failure to make the
required minimum withdrawals was due to reasonable cause and you are taking
reasonable steps to remedy the problem.
HOW ARE WITHDRAWALS FROM MY IRA TAXED?
Amounts withdrawn by you are includible in your gross income in
the taxable year that you receive them, and are taxable as ordinary income.
Lump-sum withdrawals from an IRA are not eligible for averaging treatment
available to certain lump-sum distributions from qualified employer retirement
plans.
Since the purpose of the IRA is to accumulate funds for retirement,
your receipt or use of any portion of your IRA before you attain age
591/2 generally will be considered as an early withdrawal and subject to a 10%
penalty tax.
The 10% penalty tax for early withdrawal will not apply if the
distribution:
(TM) was a result of your death or disability; or
(TM) is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or
the joint lives or life expectancies of you and your
beneficiary).
If there is an adjustment to the scheduled series of payments, the
10% penalty tax will apply. For example, if you begin receiving payments at
age 50 under a withdrawal program providing for substantially equal payments
over your life expectancy, and at age 58 you elect to receive the remaining
amount in your IRA in a lump sum, the 10% penalty tax will apply to the
lump sum and to the amounts previously paid to you before age 591/2.
HOW ARE NONDEDUCTIBLE CONTRIBUTIONS TAXED WHEN THEY ARE WITHDRAWN?
A withdrawal of nondeductible contributions (not including earnings)
will be tax-free. However, if you made both deductible and nondeductible IRA
contributions, then each distribution will be treated as partly a return of
your nondeductible contributions (not taxable) and partly a distribution
of deductible contributions and earnings (taxable). The nontaxable amount is
the portion of the amount withdrawn that bears the same ratio as your
total nondeductible IRA contributions bear to the total balance of all
your IRAs (including rollover IRAs and SEPs).
For example, assume that you made the following IRA contributions:
Year Deductible Nondeductible
1988 $2,000
1989 $2,000
1990 $1,000 $1,000
1991 $1,000
------ ------
$5,000 $2,000
------ ------
------ ------
In addition, assume that your IRA has total investment earnings
through 1992 of $1,000. During 1992 you withdraw $500. Your total account
balance as of 12/31/92 is $7,500 as shown below.
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings on IRAs $1,000
Less 1992 Withdrawal ($ 500)
--------
Total Account Balance
as of 12/31/92 $7,500
--------
--------
To determine the nontaxable portion of your 1992 withdrawal, the
total 1992 withdrawal ($500) must be multiplied by a fraction. The numerator
of the fraction is the total of all nondeductible contributions remaining
in the account before the 1992 withdrawal ($2,000). The denominator is
the total account balance as of 12/31/92 ($7,500) plus the 1992 withdrawal
($500) or $8,000.
The calculation is:
Total Remaining
Nondeductible
Contributions $2,000
x $500 = $125
------------------------- --------
Total Account Balance $8,000
Plus Withdrawal
Thus, $125 of the $500 withdrawal in 1992 will not be included in
your taxable income. The remaining $375 will be taxable for 1992. In
addition, for future calculations the remaining nondeductible contribution
total will be $2,000 minus $125, or $1,875.
A loss in your IRA investment may be deductible. You should
consult your tax advisor for further details on the appropriate calculation
for this deduction if applicable.
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the
recipient on the appropriate form. For reporting purposes, a direct transfer
of assets to a successor custodian or trustee is not considered a withdrawal.
The Custodian will report to the IRS the year-end value of your
account and the amount of any rollover or accumulation contribution made
during a calendar year, as well as the tax year for which a contribution is
made. Unless the Custodian receives an indication from you to the contrary, it
will treat any amount as a contribution for the tax year in which it is
received. It is most important that a contribution between January and April
15 for the prior year be clearly designated as such.
WHAT TAX INFORMATION MUST I REPORT TO THE IRS?
You must file IRS Form 5329 with the IRS for each taxable year
for which you made an excess contribution, or you take a premature
withdrawal, or you withdraw less than the required minimum amount from your
IRA.
You must also report each nondeductible contribution to the IRS
by designating it a nondeductible contribution on your tax return. Use IRS
Form 8606. In addition, for any year in which you make a nondeductible
contribution or take a withdrawal, you must include additional
information on your tax return. The information required includes: (1) the
amount of your nondeductible contributions for that year; (2) the amount of
withdrawals from IRAs in that year; (3) the amount by which your total
nondeductible contributions for all the years exceed the total amount of your
distributions previously excluded from gross income; and (4) the total value
of all your IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that
should be treated as a nontaxable return of your nondeductible contributions.
ARE IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax will be withheld at a flat rate of 10% from
any withdrawal from your IRA, unless you elect not to have tax withheld.
Withdrawals from an IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or
403(b) accounts that are not directly rolled over to another plan or IRA.
ARE THE EARNINGS ON MY IRA FUNDS TAXED?
Any earnings on investments held in your IRA are generally exempt
from federal income taxes and will not be taxed until withdrawn by you,
unless the tax-exempt status of your IRA is revoked.
ACCOUNT TERMINATION
You may terminate your IRA at any time after its establishment by
sending a complete IRA Distribution Form, or a transfer authorization form, to:
Warburg Pincus Funds
c/o State Street Bank
And Trust Company
P.O. Box 9030
Boston, MA 02205-9030
Your IRA with State Street Bank and Trust Company will terminate upon
the first to occur of the following:
(TM) The date your properly executed IRA Distribution Form (as
described above) is received and accepted by the Custodian or,
if later, the termination date specified in the withdrawal form.
(TM) The date the IRA ceases to qualify under the tax code. This will
be deemed a termination.
(TM) The transfer of the IRA to another custodian/trustee.
(TM) The rollover of the amounts in the IRA to another
custodian/trustee.
(TM) The written notice of revocation to the Custodian within seven
days of receipt of this Disclosure Statement.
Any outstanding fees must be received prior to such a termination
of your account. Otherwise such fees may be deducted from the proceeds of
your IRA.
The amount you receive from your IRA will be treated as a withdrawal,
and thus the rules relating to IRA withdrawals will apply. For example, if the
IRA is terminated before you reach age 591/2, the 10% early withdrawal penalty
may apply on the amount you receive.
IRA DOCUMENTS
The terms contained in Articles I to VII of the State Street Bank
and Trust Company Individual Retirement Custodial Account document have
been promulgated by the IRS in Form 5305-A for use in establishing an
individual retirement custodial account that meets the requirements of the
tax laws for a valid IRA. This IRS approval relates only to the form of
Articles I to VIII and is not an approval of the merits of the IRA or of any
investment permitted by the IRA.
Warburg Pincus Funds
c/o State Street Bank
And Trust Company
P.O. Box 9030
Boston, MA 02205-9030
STATE STREET BANK
AND TRUST COMPANY
INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT
THE FOLLOWING PROVISIONS OF ARTICLES I TO VII ARE IN THE
FORM PROMULGATED BY THE IRS IN FORM 5305-A FOR USE IN ESTABLISHING AN
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT.
ARTICLE I
The Custodian may accept additional cash contributions on behalf of
the Depositor for a tax year of the Depositor. The total cash contributions
are limited to $2,000 for the tax year unless the contribution is a
rollover contribution described in Section 402(c) (but only after December
31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to
a simplified employee pension plan as described in Section 408(k). Rollover
contributions before January 1, 1993, include rollovers described in
Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or
408(d)(3) of the Code or an employer contribution to a simplified
employee pension plan as described in Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1) No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with
other property except in a common trust fund or common investment fund
(within the meaning of Section 408(a)(5) of the Code). 2) No part of
the custodial funds may be invested in collectibles (within the
meaning of Section 408(m)) except as otherwise permitted by Section
408(m)(3), which provides an exception for certain gold and silver
coins and coins issued under the laws of any state.
ARTICLE IV
1) Notwithstanding any provisions of this Agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise
comply with Section 408(a)(6) and Proposed Regulations section 1.408-8,
including the incidental death benefit provisions of Proposed
Regulations Section 1.401(a)(9)-2, the provisions of which are
incorporated by reference.
2) Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies
shall be recalculated annually. Such election shall be irrevocable as
to the Depositor and the surviving spouse and shall apply to all
subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
3) The Depositor's entire interest in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 701/2.
By that date, the Depositor may elect, in a manner acceptable to the
Custodian, to have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly or annual payments over the joint and last
survivor lives of the Depositor and his or her designated
beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last
survivor expectancy of the Depositor and his or her designated
beneficiary.
4) If the Depositor dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of
the Depositor or, if the Depositor has not so elected, at the
election of the beneficiary or beneficiaries, either:
(i) be distributed by the December 31 of the year containing
the fifth anniversary of the Depositor's death; or
(ii) be distributed in equal or substantially equal payments
over the life or life expectancy of the designated
beneficiary or beneficiaries starting by December 31 of
the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving
spouse, then this distribution is not required to begin
before December 31 of the year in which the Depositor
would have turned age 701/2.
(c) Except where distribution in the form of an annuity meeting
the requirements of Section 408(b)(3) and its related regulations
has irrevocably commenced, distributions are treated as having
begun on the Depositor's required beginning date, even though
payments may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving
spouse, no additional cash contributions or rollover contributions
may be accepted in the account.
5) In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the Depositor's entire interest in the custodial
account as of the close of business on December 31 of the preceding
year by the life expectancy of the Depositor (or the joint life and last
survivor expectancy of the Depositor and the Depositor's designated
beneficiary, or the life expectancy of the designated beneficiary, whichever
applies). In the case of distributions under paragraph 3, determine the
initial life expectancy (or joint life and last survivor expectancy) using
the attained ages of the Depositor and designated beneficiary as of their
birthdays in the year the Depositor reaches age 70 1/2. In the case of a
distribution in accordance with paragraph 4(b)(ii), determine life
expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6) The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to
satisfy the minimum distribution requirements described above. This method
permits an individual to satisfy these requirements by taking from one
individual retirement account the amount required to satisfy the
requirement for another.
ARTICLE V
1) The Depositor agrees to provide the Custodian with information necessary for
the Custodian with information necessary for the Custodian to prepare any
reports required under Section 408(i) and Regulations Sections 1.408-5 and
1.408-6.
2) The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles that may be added or incorporated, the
provisions of Articles through and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This Agreement will be amended from time to time to comply with the provisions
of the Code and regulated regulations. Other amendments may be made with the
consent of the persons whose signatures appear on the Adoption Agreement.
ARTICLE VIII
1) As used in this Article the following terms have the following meanings:
"Custodian" means State Street Bank and Trust Company.
"Fund" means a mutual fund or registered investment company
that is specified in the Adoption Agreement, or that is designated by
the Distributor named in the Adoption Agreement, as being available
as an investment for the custodial account, provided, however, that
such a mutual fund or registered investment company must be legally
offered for sale in the state of the Depositor's residence in order
to be a Fund hereunder.
"Distributor" means the entity which has a contract with the
Fund(s) to serve as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned
hereunder to the Distributor may be performed by the Fund(s) or by
an entity that has a contract to perform management or investment
advisory services for the Fund(s).
"Service Company" means any entity employed by the Custodian or
the Distributor, including the transfer agent for the Fund(s), to
perform various administrative duties of either the Custodian or the
Distributor.
In any case where there is no Service Company, the duties
assigned hereunder to the Service Company will be performed by the
Distributor (if any) or by an entity specified in the second
preceding paragraph.
2) The Depositor may revoke the custodial account established hereunder by
mailing or delivering a written notice of revocation to the Custodian
within seven days after the Depositor receives the Disclosure Statement
related to the custodial account. Mailed notice is treated as given to the
Custodian on date of the postmark (or on the date of Post Office
certification or registration in the case of notice sent by certified
or registered mail). Upon timely revocation, the Depositor's initial
contribution will be returned, without adjustment for administrative
expenses, commissions or sales charges, fluctuations in market value
or other changes.
3) All contributions to the custodial account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such
investments shall be made in such proportions and/or in such amounts as
the Depositor from time to time in the Adoption Agreement or by other
written notice to the Service Company (in such form as may be acceptable
to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting
all investment directions by the Depositor for the purchase or sale of
shares of one or more Funds hereunder to the Funds' transfer agent for
execution. However, if investment directions with respect to the
investment of any contribution hereunder are not received from the
Depositor as required or, if received, are unclear or incomplete in the
opinion of the Service Company, the contribution will be returned
to the Depositor without liability for interest or for loss of income or
appreciation. If any directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the
custodial account are unclear or incomplete in the opinion of the Service
Company, the Service Company will refrain from carrying out such
investment directions or from executing any such sale or purchase,
without liability for loss of income or for appreciation or depreciation
of any asset, pending receipt of clarification or completion from the
Depositor.
All investment directions by the Depositor will be subject to any
minimum initial or additional investment or minimum balance rules
applicable to a Fund as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's account shall be retained in the
account and (unless received in additional shares) shall be reinvested in
full and fractional shares of such Fund.
4) Subject to the minimum initial or additional investment, minimum balance
and other exchange rules applicable to a Fund, the Depositor may at any
time direct the Service Company to exchange all or a specified portion
of the shares of a Fund in the Depositor's account for shares and
fractional shares of one or more other Funds. The Depositor shall give
such directions by written or telephonic notice acceptable to the Service
Company, and the Service Company will process such directions as soon as
practicable after receipt thereof (subject to the second paragraph of
Section 3 of this Article).
5) Any purchase or redemption of shares of a Fund for or from the Depositor's
account will be effected at the public offering price or net asset value
of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for
or from the Depositor's account will be subject to any applicable sales,
redemption or other charge as described in the then effective prospectus
for such Fund.
6) The Service Company shall maintain adequate records of all purchases or
sales of shares of one or more Funds for the Depositor's custodial
account. Any account maintained in connection herewith shall be in the
name of the Custodian for the benefit of the Depositor. All assets of the
custodial account shall be registered in the name of the Custodian or of
a suitable nominee. The books and records of the Custodian shall
show that all such investments are part of the custodial account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the custodial account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the
account hereunder will be deemed to satisfy the Custodian's
recordkeeping responsibilities therefor. The Service Company agrees to
furnish the Custodian with any information the Custodian requires to
carry out the Custodian's recordkeeping responsibilities.
7) Neither the Custodian nor any other party providing services to the
custodial account will have any responsibility for rendering advice with
respect to the investment and reinvestment of the Depositor's custodial
account, nor shall such parties be liable for any loss or diminution in
value which results from the Depositor's exercise of investment control
over his custodial account. The Depositor shall have and exercise
exclusive responsibility for and control over the investment of the assets
of his custodial account, and neither the Custodian nor any other such
party shall have any duty to question his directions in that regard or to
advise him regarding the purchase, retention or sale of shares of one or
more Funds for the custodial account.
8) The Depositor may appoint an investment advisor with respect to the
custodial account on a form acceptable to the Custodian and the Service
Company. The investment advisor's appointment will be in effect until
written notice to the contrary is received by the Custodian and the
Service Company. While an investment advisor's appointment is in effect,
the investment advisor may issue investment directions or may issue orders
for the sale or purchase of shares of one or more Funds to the Service
Company, and the Service Company will be fully protected in carrying out
such investment directions or orders to the same extent as if they had
been given by the Depositor.
The Depositor's appointment of any investment advisor will also be
deemed to be instructions to the Custodian and the Service Company to pay
such investment advisor's fees to the investment advisor from the
custodial account hereunder without additional authorization by the
Depositor or the Custodian.
9) Distribution of the assets of the custodial account shall be made at
such time and in such form as the Depositor (or the Beneficiary if the
Depositor is deceased) shall elect by written order to the Custodian. The
Depositor acknowledges that any distribution (except for distribution on
account of the Depositor's disability or death, return of an "excess
contribution" referred to in Code Section 408(d), or a "rollover" from
this custodial account) made earlier than age 591/2 may subject the
Depositor to an "additional tax on early distributions" under Code
Section 72(t). For that purpose, the Depositor will be considered
disabled if the Depositor can prove, as provided in Code Section 72(m)(7),
that the Depositor is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment
that can be expected to result in death or be of long-continued and
indefinite duration. It is the responsibility of the Depositor (or
Beneficiary) by appropriate distribution instructions to the Custodian
to insure that the distribution requirements of Code Section 401(a)(9)
and the Article above are met. If the Depositor (or Beneficiary) does not
direct the Custodian to make distributions from the custodial account by
the time that such distributions are required to commence in accordance
with such distribution requirements, the Custodian (and Service Company)
shall assume that the Depositor (or Beneficiary) is meeting the minimum
distribution requirements from another individual retirement arrangement
maintained by the Depositor (or Beneficiary) and the Custodian and Service
Company shall be fully protected in so doing. The Depositor (or the
Depositor's surviving spouse) may elect to comply with the distribution
requirements in Article IV using the recalculation of life expectancy
method, or may elect that the life expectancy of the Depositor
(and/or the Depositor's surviving spouse) will not be recalculated; any
such election may be in such form as the Depositor (or surviving
spouse) provides (including the calculation of minimum distribution
amounts in accordance with a method that does not provide for
recalculation of the life expectancy of one or both of the Depositor and
surviving spouse and instructions to the Custodian in accordance with
such method). Neither Custodian nor any other party providing
services to the custodial account assumes any responsibility for
the tax treatment of any distribution from the custodial account;
such responsibility rests solely with the person ordering the
distribution.
10) The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of the Depositor (or the
Beneficiary if the Depositor is deceased) containing such information
as the Custodian may reasonably request. Also, before making any
distribution or honoring any assignment of the custodial account,
the Custodian shall be furnished with any and all applications,
certificates, tax waivers, signature guarantees and other documents
(including proof of any legal representative's authority) deemed
necessary or advisable by the Custodian, but the Custodian shall not be
responsible for complying with an order that appears on its face to be
genuine, or for refusing to comply if not satisfied it is genuine, and
the Custodian has no duty of further inquiry. Any distributions from the
account may be mailed, first-class postage prepaid, to the last known
address of the person who is to receive such distribution, as shown on
the Custodian's records, and such distribution shall to the extent
thereof completely discharge the Custodian's liability for such
payment.
11) (a) The term "Beneficiary" means the person or persons designated as such
by the "designating person" (as defined below) on a form acceptable
to the Custodian for use in connection with the custodial account,
signed by the designating person, and filed with the Custodian.
The form may name individuals, trusts, estates, or other entities as
either primary or contingent beneficiaries. However, if the designation
does not effectively dispose of the entire custodial account as of the
time distribution is to commence, the term "Beneficiary" shall then
mean the designating person's estate with respect to the assets of the
custodial account not disposed of by the designation form. The form
last accepted by the Custodian before such distribution is to
commence, provided it was received by the Custodian (or deposited
in the U.S. Mail or with a delivery service) during the designating
person's lifetime, shall be controlling and, whether or not fully
dispositive of the custodial account, thereupon shall revoke all such
forms previously filed by that person. The term "designating person"
means the Depositor during his or her lifetime; after the Depositor's
death, it also means the Depositor's spouse if the spouse begins to
receive a portion of the custodial account (pursuant to such a
designation by the Depositor) under a form of distribution permitted
by Article IV. A designation by the Depositor's spouse shall relate
solely to the balance remaining in the spouse's portion of the
custodial account after the death of the spouse.
(b) When and after distributions from the custodial account to the
Depositor's Beneficiary commence, all rights and obligations assigned
to the Depositor hereunder shall inure to, and be enjoyed and
exercised by, the Beneficiary instead of the Depositor.
12) (a) The Depositor agrees to provide information to the Custodian at such
time and in such manner as may be necessary for the Custodian to
prepare any reports required under Section 408(i) of the Code and
the regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and manner
and containing such information as is prescribed by the Internal
Revenue Service.
(c) The Depositor, Custodian and Service Company shall furnish to
each other such information relevant to the custodial account as may
be required under the Code and any regulations issued or forms
adopted by the Treasury Department thereunder or as may otherwise
be necessary for the administration of the custodial account.
(d) The Depositor shall file any reports to the Internal Revenue
Service that are required of him by law (including Form 5329), and
neither the Custodian nor Service Company shall have any duty to
advise the Depositor concerning or monitor the Depositor's
compliance with such requirement.
13) (a) The Depositor retains the right to amend this custodial account
document in any respect at any time, effective on a stated date that
shall be at least 60 days after giving written notice of the
amendment (including its exact terms) to the Custodian by registered
or certified mail, unless the Custodian waives notice as to such
amendment. If the Custodian does not wish to continue serving as such
under this custodial account document as so amended, it may resign in
accordance with Section 17 below.
(b) The Depositor delegates to the Custodian the Depositor's right so to
amend, provided the Custodian amends in the same manner all
agreements comparable to this one, having the same Custodian,
permitting comparable investments, and under which such power has
been delegated to it; this includes the power to amend retroactively
if necessary or appropriate in the opinion of the Custodian in
order to conform this custodial account to pertinent provisions of
the Code and other laws or successor provisions of law, or to obtain a
governmental ruling that such requirements are met, to adopt a
prototype or master form of agreement in substitution for this
Agreement, or as otherwise may be advisable in the opinion of the
Custodian. Such an amendment by the Custodian shall be communicated
in writing to the Depositor, and the Depositor shall be deemed to
have consented thereto unless, within 30 days after such communication
to the Depositor is mailed, the Depositor either (i) gives the
Custodian a written order for a complete distribution or transfer of
the custodial account, or (ii) removes the Custodian and appoints a
successor under Section 17 below.
Pending the adoption of any amendment necessary or desirable to
conform this custodial account document to the requirements of any
amendment to the Internal Revenue Code or regulations or rulings
thereunder, the Custodian and the Service Company may operate the
Depositor's custodial account in accordance with such requirements
to the extent that the Custodian and/or the Service Company deem
necessary to preserve the tax benefits of the account.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
amendment shall increase the responsibilities or duties of the
Custodian without its prior written consent.
(d) This Section 13 shall not be construed to restrict the Custodian's
right to substitute fee schedules in the manner provided by Section 16
below, and no such substitution shall be deemed to be an amendment
of this Agreement.
14) (a) The Custodian shall terminate the custodial account if this Agreement
is terminated or if, within 30 days (or such longer time as the
Custodian may agree) after resignation or removal of the Custodian
under Section 17, the Depositor has not appointed a successor
that has accepted such appointment. Termination of the
custodial account shall be effected by distributing all assets
thereof in a single payment in cash or in kind to the Depositor,
subject to the Custodian's right to reserve funds as provided in
Section 17.
(b) Upon termination of the custodial account, this custodial account
document shall have no further force and effect, and the Custodian
shall be relieved from all further liability hereunder or with
respect to the custodial account and all assets thereof so
distributed.
15) (a) In its discretion, the Custodian may appoint one or more
contractors or service providers to carry out any of its functions
and may compensate them from the custodial account for expenses
attendant to those functions.
(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from the Depositor and
for dealing with or forwarding the same to the transfer agent for the
Fund(s).
(c) The parties do not intend to confer any fiduciary duties on the
Custodian or Service Company (or any other party providing services
to the custodial account), and none shall be implied. Neither shall
be liable (or assumes any responsibility) for the collection of
contributions, the proper amount, time or deductibility of any
contribution to the custodial account or the propriety of any
contributions under this Agreement, or the purpose, time, amount
(including any minimum distribution amounts) or propriety of
any distribution hereunder, which matters are the responsibility of
the Depositor and the Depositor's Beneficiary.
(d) As soon as is practicable after the close of each taxable year, and
whenever required by the Code, or Regulations thereunder, the
Custodian and Service Company shall each file with the Depositor
a written report or reports reflecting the transactions effected by it
during such period and the assets of the custodial account at its
close. Upon the expiration of 60 days after such a report is sent
to the Depositor (or Beneficiary), the Custodian and Service
Company shall be forever released and discharged from all liability
and accountability to anyone with respect to transactions shown in or
reflected by such report except with respect to any such acts or
transactions as to which the Depositor shall have filed written
objections with the Custodian or Service Company within such 60-day
period.
(e) The Service Company shall deliver, or cause to be delivered, to
the Depositor all notices, prospectuses, financial statements and
other reports to shareholders, proxies and proxy soliciting materials
relating to the shares of the Funds(s) credited to the custodial
account. No shares shall be voted, and no other action shall be taken
pursuant to such documents, except upon receipt of adequate written
instructions from the Depositor.
(f) The Depositor shall always fully indemnify the Service Company,
Distributor, Fund(s) and Custodian, and save them harmless from any and
all liability whatsoever that may arise either (i) in connection
with this Agreement and the matters that it contemplates, except
that which arises directly out of the Service Company's,
Distributor's or Custodian's negligence or willful misconduct; or
(ii) with respect to making or failing to make any distribution,
other than for failure to make distribution in accordance with an order
therefor that is in full compliance with Section 10. Neither the
Service Company nor the Custodian shall be obligated or expected to
commence or defend any legal action or proceeding in connection with
this Agreement or such matters unless agreed upon by that party and the
Depositor, and unless fully indemnified for so doing to that party's
satisfaction.
(g) The Custodian and Service Company shall each be responsible
solely for performance of those duties expressly assigned to it in
this Agreement, and neither assumes any responsibility as to duties
assigned to anyone else hereunder or by operation of law.
(h) The Custodian and Service Company may each conclusively rely upon and
shall be protected in acting upon any written order from the
Depositor or Beneficiary, or any investment advisor appointed under
Section 8, or any other notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed, and so long as it acts in good faith, in taking
or omitting to take any other action in reliance thereon. In
addition, the Custodian will carry out the requirements of any
apparently valid court order relating to the custodial account and
will incur no liability or responsibility for so doing.
16) (a) The Custodian, in consideration of its services under this
Agreement, shall receive the fees specified on the applicable fee
schedule. The fee schedule originally applicable shall be the one
specified in the Disclosure Statement furnished to the Depositor.
The Custodian may substitute a different fee schedule at any time
upon 30 days' written notice to the Depositor. The Custodian shall
also receive reasonable fees for any services not contemplated by any
applicable fee schedule and either deemed by it to be necessary or
desirable or requested by the Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes of any
kind whatsoever, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect to such
assets, and all other administrative expenses incurred by the
Custodian in the performance of its duties (including fees for legal
services rendered to it in connection with the custodial account) shall
be charged to the custodial account.
(c) All such fees and taxes and other administrative expenses charged to
the custodial account shall be collected either from the amount of
any contribution or distribution to or from the account, or (at the
option of the person entitled to collect such amounts) to the extent
possible under the circumstances by the conversion into cash of
sufficient shares of one or more Funds held in the custodial account
(without liability for any loss incurred thereby). Notwithstanding
the foregoing, the Custodian or Service Company may make demand upon
the Depositor for payment of the amount of such fees, taxes and other
administrative expenses. Fees that remain outstanding after 60 days may
be subject to a collection charge.
17) (a) Upon 30 days' prior written notice to the Custodian, the Depositor
may remove it from its office hereunder. Such notice, to be
effective, shall designate a successor custodian and shall be
accompanied by the successor's written acceptance. The Custodian also
may at any time resign upon 30 days' prior written notice to the
Depositor, whereupon the Depositor shall appoint a successor to the
Custodian.
(b) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury under Code
Section 408(a)(2). Upon receipt by the Custodian of written
acceptance by its successor of such successor's appointment, the
Custodian shall transfer and pay over to such successor the assets of
the custodial account and all records (or copies thereof) of the
Custodian pertaining thereto, provided that the successor custodian
agrees not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such sum of
money or property as it may deem advisable for payment of all its
fees, compensation, costs, and expenses, or for payment of any other
liabilities constituting a charge on or against the assets of the
custodial account or on or against the Custodian, with any balance of
such reserve remaining after the payment of all such items to be paid
over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or comissions of
its predecessor or its successor.
18) References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including
successors to such sections.
19) Except where otherwise specifically required in this Agreement, any
notice from the Custodian to any person provided for in this Agreement
shall be effective if sent by first-class mail to such person at that
person's last address on the Custodian's records.
20) The Depositor or the Depositor's Beneficiary shall not have the right or
power to anticipate any part of the custodial account or to sell,
assign, transfer, pledge or hypothecate any part thereof. The custodial
account shall not be liable for the debts of the Depositor or the
Depositor's Beneficiary, or subject to any seizure, attachment,
execution or other legal process in respect thereof. At no time shall it
be possible for any part of the assets of the custodial account to be
used for or diverted to purposes other than for the exclusive benefit of
the Depositor or his or her Beneficiary.
21) When accepted by the Custodian, this Agreement is accepted in and
shall be construed and administered in accordance with the laws of the
Commonwealth of Massachusetts. Any action involving the Custodian
brought by any other party must be brought in a state or federal court in
such Commonwealth.
This Agreement is intended to qualify under Code Section 408(a) as an
individual retirement custodial account and to entitle the Depositor
to the retirement savings deduction under Code Section 219 if available,
and if any provision hereof is subject to more than one interpretation
or any term used herein is subject to more than one construction, such
ambiguity shall be resolved in favor of that interpretation or
construction which is consistent with that intent.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and the Depositor
is referred to the Depositor's attorney for any such assurances.
22) The Depositor should seek advice from the Depositor's attorney regarding
the legal consequences (including but not limited to federal and state tax
matters) of entering into this Agreement, contributing to the custodial
account, and ordering the Custodian to make distributions from the
account. The Depositor acknowledges that the Custodian and Service
Company (and any company associated therewith) are prohibited by law from
rendering such advice.
23) Articles through of this Agreement are in the form promulgated by the
Internal Revenue Service. It is anticipated that if and when the Internal
Revenue Service promulgates changes to Form 5305-A, the Custodian will
amend this Agreement correspondingly.
24) The Depositor acknowledges that he or she has received and read the current
prospectus for each Fund in which his or her account is invested and the
Individual Retirement Account Disclosure Statement related to the Account.
The Depositor represents under penalties of perjury that his or her Social
Security Number (or other Taxpayer Identification Number) as stated in the
Adoption Agreement is correct.
WARBURG PINCUS FUNDS
WARBURG PINCUS FUNDS
P.O. BOX 9030,
BOSTON, MA 02205-9030
800-WARBURG (800-927-2874)