A Retirement Plan for Individuals · oCheck (Please make check payable to the Timothy Plan.) oBank Wire (For instructions, please contact the Transfer Agent toll free at 1-800-662-0201.)

A Retirement Planfor Individuals

J a n u a r y 1 0 , 2 0 1 8

SIMPLE INDIVIDUAL RETIREMENT ACCOUNT

This page intentionally left blank.

SIMPLE IRA: NEW ACCOUNT APPLICATION | page 1 of 4

NEW ACCOUNT APPL ICATIONSIMPLE IRA A

Participant Information FOR ASSISTANCE with this form, call Shareholder Services at (800) 662-0201, or the Timothy Plan at (800) 846-7526.

Account Registration

NAME (First, Initial, Last) GENDER: m MALE m FEMALE DATE OF BIRTH

ADDRESS

CITY STATE ZIP

DAYTIME PHONE NUMBER EMAIL (optional) TAXPAYER ID NUMBER or SSN

U.S. CITIZENSHIPSTATUS:

m CITIZENm RESIDENT ALIENm NONRESIDENT ALIEN

1

Employer InformationCOMPANY NAME GENDER: m MALE m FEMALE EMPLOYER CONTACT NAME (First, Initial, Last)

ADDRESS CITY, STATE ZIP

DAYTIME PHONE NUMBER EMAIL (optional) TAXPAYER ID NUMBER or SSN PLAN EFFECTIVE DATE

Your Beneficiaries WARNING. If you do not name benefi-ciaries, your account will be paid out to your estate, and probably be subject to probate.

SPOUSAL CONSENT: If you live in a marital or community property state, and your spouse is not the sole primary beneficiary, your spouse must sign the Spousal Consent under Item 6 of this form.

I designate the following (as indicated):

PRIMARY BENEFICIARY(IES), to receive the percentage indicated of my IRA Ac-count in the event of my death.

CONTINGENT BENEFICIARY(IES), to re-ceive the percentage indicated of my IRA Account in the event of the death of my primary beneficiary(ies).

After your death, the SIMPLE IRA assets will be distributed in equal shares (unless indicated otherwise) to the primary beneficiaries who survive you. You may revoke or change the beneficiary designation at any time by com-pleting a new IRA Change of Beneficiary Form and providing it to the Custodian.

TRUSTS: To name a trust as your bene-ficiary, attach to this form either a copy of the pertinent pages of the trust agreement or a certification, in writing, acceptable to the IRA Custodian.

PERCENTAGES: All stated percentages must be whole percentages (e.g., 33%, not 33.3%). If the percentages do not add up to 100%, each beneficiary’s share will be based proportionately on the stated percentages.

BENEFICIARY NAME TYPE: m PRIMARY m CONTINGENT DATE OF BIRTH RELATIONSHIP PERCENTAGE

ADDRESS TAXPAYER ID NUMBER or SSN

%

PER STIRPES: IF YOU WANT THE CHILDREN OF A BENEFICIARY YOU LISTED TO INHERIT THAT BENEFICIARY’S SHARE (IF THAT BENEFICIARY PREDECEASES YOU), CHECK THE PER STIRPES BOX(ES) ABOVE. THIS WILL OVERRIDE ANY SELECTIONS BELOW.

IF YOU DID NOT SELECT PER STIRPES, SELECT THE FOLLOWING THAT ACCURATELY REFLECTS YOUR WISHES FOR THOSE WHO ARE NOT DESIGNATED PER STIRPES. YOU MAY ALSO ATTACH A SEPARATE DESIGNATION DULY SIGNED, DATED AND WITNESSED.

o The share of a primary beneficiary who predeceases me shall go to the primary beneficiary(ies) who survive me in the ratio that each such surviving primary beneficiary’s(ies’) percentage bears to the total percentage of all surviving primary beneficiary(ies).

o The share of a primary beneficiary who predeceases me shall go to the contingent beneficiary(ies) who survive me in the ratio that each such surviving contingent beneficiary’s(ies’) percentage bears to the total percentage of all surviving contingent beneficiary(ies).



%



%



%

1. m PER STIRPES

2. m PER STIRPES

3. m PER STIRPES

4. m PER STIRPES


NEW ACCOUNT APPL ICATIONSIMPLE IRAA

Contribution Information2Source of Funds SPECIAL INSTRUCTIONS: Recharacterization: An irrevocable

recharacterization election must be pro-vided to the IRA Custodian.

Direct Transfer: Complete and attach an IRA Transfer form.

Rollover: Complete and attach an IRA Direct Rollover form.

*SIMPLE IRA: You may not rollover a distribution from a Traditional IRA, SEP IRA or an employer-sponsored plan to a SIMPLE IRA until at least two years have elapsed from the time of your initial par-ticipation in your employer’s SIMPLE IRA plan.

o Elective Deferral Amount: $_______________ Tax Year: 20_____

o Employer Match Contribution Amount: $_______________ Tax Year: 20_____

o Employer Nonelective Contribution Amount: $_______________ Tax Year: 20_____

o Direct Transfer From SIMPLE IRA

o Rollover SOURCE: o SIMPLE IRA

o Traditional IRA*

o SEP IRA*

o Employer-Sponsored Plan (e.g., 401(a), 401(k), 403(b), governmental 457(b))*

Is the rollover being completed within 60 days of receipt of the distribution?

o Yes

o No (Note: Rollovers contributions typically must be made within 60 days of distribution. Rollover con-tributions beyond 60 days will only be accepted if accompanied by a Self-Certification of Late Roll-over/Conversion form.)

o Check here if a Self-Certification of Late Rollover/Conversion form is attached.

o Not Applicable this is a direct rollover from an employer-sponsored plan

o Recharacterization Amount: $_______________ Tax Year: 20_____

o Other EXPLAIN: ____________________________________________________________________________________

EMPLOYER NAME PLAN NUMBERGroup Plan o Yes. This account will be part of a group plan.

Net Asset Value (NAV) o Process the enclosed purchase for NAV purchases. I certify that o I am o my client is eligible for this option according to the terms set forth in the fund prospectus.

Reduced Sales ChargeClass A & C shares combined.

LETTER OF INTENT: Please be advised that over the course of the next thirteen months, I intend to purchase a cu-mulative amount of the Timothy Plan family of funds equal to or in excess of:o $50,000 o $100,000 o $250,000 o $500,000 o $750,000 o Over $1 millionIf you intend to invest a certain amount over a 13 month period, you may be entitled to reduced sales charges on Class A share purchases. If the amount indicated is not invested within 13 months, regular sales charge rates will apply to shares purchased and any difference in the sales charge owed versus the sales charge previously paid will be deducted from escrowed shares. Please refer to the prospectus for terms and conditions.

RIGHT OF ACCUMULATION: The following accounts, if any, are related and should be included in my aggregate purchases to be calculated when assessing my reduced sales load.

1. 2. 3. 4.

$750,000 BREAKPOINT: This selection is only applicable for Fixed Income and High Yield Bond Funds.


NEW ACCOUNT APPL ICATIONSIMPLE IRA A

Acknowledgment5By signing this SIMPLE IRA Application, I certify that the information I have provided is true, correct, and complete, and the Custodian (Constellation Trust Company, Post Office Box 541150, Omaha, NE 68154) may rely on what I have provided. In addition, I have read and received copies of the SIMPLE IRA Application, IRS Form 5305-SA, Disclosure Statement and Financial Disclosure, including the applicable fee schedule. I agree to be bound to their terms and conditions. I understand that if the deposit establishing the SIMPLE IRA contains rollover dollars, I elect to irrevocably designate this deposit as a rollover contribution. I understand that I am responsible for the SIMPLE IRA transactions I conduct, and I will indemnify and hold the Custodian harmless from any consequences related to executing my directions. I have been advised to seek competent legal and tax advice and have not been provided any such advice from the Custodian.

SIGNATURE OF SIMPLE IRA OWNER DATE

Your SignatureWARNING. This application cannot be

processed unless signed below by the Tradi-tional (or Inherited) IRA Owner.CURRENT MARITAL STATUS m I am not married – I understand that if I

become married in the future, I must com-plete a new beneficiary designation that includes the spousal consent provisions.

m I am married – I understand that if I desig-nate a primary beneficiary other than my spouse, my spouse must sign below.

NOTE: The Fund Custodian, Constel-lation Trust Company, charges $10.00 per account number in connection with plan es-tablishment and maintenance, of which, $5.00 is remitted to the fund underwriter, Timothy Partners, Ltd.

USA Patriot Act Notice IMPORTANT INFORMATION: Under the USA Patriot Act, Federal law requires all financial institutions (including mu-tual funds) to obtain, verify, and record information that identifies each person who opens an account. The informa-tion you provide is used exclusively as required under the Patriot Act and to provide the services you have requested.

WHAT THIS MEANS FOR YOU: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask for additional identifying documents. The infor-mation is required for all owners, co-owners, or anyone who will be signing or completing a transaction on behalf of a legal entity that will own the account. We must return your application if any of this information is missing. If we are unable to verify this information, your account may be closed and you will be subject to all applicable costs. If you have any questions regarding this application, please call (800) 662-0201.

m I am exempt from the Foreign Account Tax Compliant Act. The IRS does not require your consent to any provision of this document other than the certification required to avoid backup withholding.

Payment Method4o Check (Please make check payable to the Timothy Plan.)

o Bank Wire (For instructions, please contact the Transfer Agent toll free at 1-800-662-0201.)

o Employer (Contributions will be forthcoming from my employer.)

o Direct Transfer (Funds will be transferred directly from another IRA, SEP-IRA or retirement plan.)

oOther _______________________________________________________________________________________________________

Payment MethodYou can open your account using any of these methods. Please check your choice.

DIRECT TRANSFERS: Complete and attach the IRA Transfer Request Form.

Investment Selection3Your Fund ChoicesIf no share class is indicated, a Class A share account will be established.

20____ 20____

INDIVIDUAL INDIVIDUALFUND NAME(S) CLASS CONTRIBUTION CONTRIBUTION

1. $ $ $ %

2. $ $ $ %

3. $ $ $ %

4. $ $ $ %

ALLOCATION

A C

A C

A C

A C

Telephone Transaction Privileges

If you elect to do so, you may exchange and/or redeem by telephone.

NO, I DO NOT WANT THE FOLLOWING PRIVILEGES:

o Telephone Exchange. o Telephone Redemption.


NEW ACCOUNT APPL ICATIONSIMPLE IRAA

Spousal ConsentSIMPLE IRA owners who reside in or whose IRA is located in a community or marital property state should review this section. This section may have important tax consequences to you and your spouse so please consult with a competent advisor prior to completing. If this is an Inherited IRA, seek competent legal/tax advice to see if spousal consent is required. If you are not currently married and you marry in the future, you must complete a new beneficiary designation that includes the spousal consent provisions.

NOTARY IS REQUIRED.

CONSENT OF SPOUSE

By signing below, I acknowledge that I am the spouse of the SIMPLE IRA Owner and agree with and consent to my spouse’s designation of a primary beneficiary other than, or in addition to, me. I have been advised to consult a competent advisor and I assume all responsibility regarding this consent. The Custodian has not provided me any legal or tax advice.

THE ABOVE CONSENT WAS SIGNED AND ACKNOWLEDGED BEFORE ME ON THIS

_______ day of _________________, 20_____.

My commission expires: _________________

SIGNATURE OF SPOUSE DATE

SIGNATURE OF NOTARY PUBLIC

CONSTELLATION TRUST COMPANY DATE

Acceptance by CustodianCUSTODIAN USE ONLY.

The undersigned, as Custodian under the Plan, accepts the above Account and acknowledges receipt and accep-tance of the Beneficiary Designation. Accepted by:

Mailing Your Application7

For Dealer Use Only6

Your Financial RepresentativeIF APPLICABLE.

BROKER/DEALER NAME BRANCH NUMBER

BRANCH ADDRESS

REPRESENTATIVE’S NAME PRODUCER NUMBER PHONE NUMBER

RETURN THIS FORM BY MAIL TO:

The Timothy Planc/o Ultimus Fund Solutions Post Office Box 541150Omaha, NE 68154

Tollfree | (800) 662-0201 Telephone | (402) 493-4603 Facsimile | (402) 963-9094

Traditional, SEP or SIMPLE IRA: REQUEST FOR TRANSFER | page 1 of 2

REQUEST FOR TRANSFERTraditional, SEP or SIMPLE IRA B

Participant / Owner Information FOR ASSISTANCE with this form, call Shareholder Services at (800) 662-0201, or the Timothy Plan at (800) 846-7526.

NAME (First, Initial, Last) GENDER: m MALE m FEMALE DATE OF BIRTH


DAYTIME PHONE NUMBER TAXPAYER ID NUMBER or SSN TIMOTHY PLAN ACCOUNT NUMBER (if any)

Account Information1

Current Custodian / Financial Institution ATTACH a copy of your recent account statement from your present Custodian.

NAME FINANCIAL INSTITUTION (Trustee, Custodian or Employer) ACCOUNT NUMBER PHONE NUMBER


Account to be Transferred2

Transfer Instructions3Asset Transfer Transferee custodian/trustee may require documentation if the minimum distribution has not been satisfied prior to this transfer.

SIMPLE IRA funds cannot be transferred to a Traditional IRA for two years following the date of the initial SIMPLE contribution.

CURRENT PLAN TYPE: (SELECT ONE)

o Traditional IRAo Rollover IRAo SEP-IRAo SIMPLE IRAo Employer-Sponsored:_______________________________

TYPE OF PLAN TRANSFERRING TO: (SELECT ONE)

o Traditional IRAo Rollover IRAo Roth IRA (must have a Roth IRA Application)o SEP-IRAo SIMPLEo Inherited (Beneficiary) IRA

Net Asset Value (NAV) o Process the enclosed purchase for NAV purchases. I certify that o I am o my client is eligible for this option according to the terms set forth in the fund prospectus.

Assets to be Transferred

NOTE: Penalties and market fluctuation may affect the distribution amount.

WIRE TRANSFERS: If you choose to wire-transfer your funds, contact your finan-cial organization for information regarding any incoming or outgoing wire-transfer fees that may apply.

FUND(S) TO BE LIQUIDATED ACCOUNT NUMBER AMOUNT TO BE TRANSFERRED SENT DATE

1. $ %

2. $ %

3. $ %

A. PAYMENT AMOUNT: m My entire Retirement Account. m A portion of my Retirement Account. $________

B. PAYMENT SCHEDULE : m Immediately liquidate all investments and send cash proceeds. m Liquidate the investments as identified below:

Investment Selection4

NEW ACCOUNTS: Complete and at-tach the Traditiona/SEP New Account Form.

Your Fund ChoicesIf no share class is indicated, a Class A share account will be established.

FUND NAME(S) CLASS*

1. $ %

2. $ %

3. $ %

ALLOCATION

A C

A C

A C

FUND NAME(S) CLASS*

4. $ %

5. $ %

6. $ %

ALLOCATION

A C

A C

A C

Traditional, SEP or SIMPLE IRA: REQUEST FOR TRANSFER | page 2 of 2

REQUEST FOR TRANSFERTraditional, SEP or SIMPLE IRAB

Acknowledgment5Your Signature

WARNING. This application will not be processed unless signed below by the Tradi-tional IRA Owner (or Inherited IRA Owner).

SIGNATURE GUARANTEE: Your current trustee/custodian may require a guaranteed signature. Contact them for signature requirements.

I certify that I have established the appropriate IRA account with the Timothy Plan, of which Constellation Trust Company is the transferee custodian/trustee. I certify that the information contained on this form is true and correct. I direct the transferor custodian/trustee to transfer my IRA assets as set forth in this form. I understand I should seek the guidance of a tax or legal professional with regard to this decision. I understand that if I establish a separate conduit account, it is my responsibility to keep my conduit account separate from my other accounts. I understand that my custodian/trustee cannot provide legal advice. I indemnify and agree to hold the custodian/trustee harmless against any liabilities. I assume full responsibility for the consequences of this transfer decision. The custodian/trustee agrees to accept these funds as a transfer.

The custodian/trustee signing below agrees to accept custodianship/trusteeship, and the transferring assets de-scribed above, for the Timothy Plan IRA account established on behalf of the above-named owner.

To Current Trustee / CustodianFOR SUCCESSOR AND CURRENT CUSTODIAN ONLY.

DELIVERY INSTRUCTIONS

A. Transferee IRA Account Number

B. Make check payable to or certificate registration in the name of

as m Custodian m Trustee for the m Traditional m SIMPLE IRA of

CONSTELLATION TRUST COMPANY DATE

Mailing Your Application6

SIGNATURE OF IRA OWNER (OR INHERITED IRA OWNER)

DATE

Reduced Sales ChargeClass A & C shares combined.

LETTER OF INTENT: Please be advised that over the course of the next thirteen months, I intend to purchase a cu-mulative amount of the Timothy Plan family of funds equal to or in excess of:o $50,000 o $100,000 o $250,000 o $500,000 o $750,000 oOver $1 millionIf you intend to invest a certain amount over a 13 month period, you may be entitled to reduced sales charges on Class A share purchases. If the amount indicated is not invested within 13 months, regular sales charge rates will apply to shares purchased and any difference in the sales charge owed versus the sales charge previously paid will be deducted from escrowed shares. Please refer to the prospectus for terms and conditions.

RIGHT OF ACCUMULATION: The following accounts, if any, are related and should be included in my aggregate purchases to be calculated when assessing my reduced sales load.

1. 2. 3. 4.

$750,000 BREAKPOINT: This selection is only applicable for Fixed Income and High Yield Bond Funds.

RETURN THIS FORM BY MAIL TO:

The Timothy Planc/o Ultimus Fund Solutions Post Office Box 541150Omaha, NE 68154

Tollfree | (800) 662-0201 Telephone | (402) 493-4603 Facsimile | (402) 963-9094

1

Art ic le IThe Custodian will accept cash contributions made on behalf of the Participant by the Participant’s employer under the terms of a SIMPLE IRA plan described in section 408(p). In addition, the Custodian will accept transfers or rollovers from other SIMPLE IRAs of the Participant and, after the 2-year period of participation defined in section 72(t)(6), transfers or rollovers from any eligible retirement plan (as defined in section 402(c)(8)(B)) other than a Roth IRA or a designated Roth account.

Article I IThe Participant’s interest in the balance in the Custodial Account is nonforfeitable.

Article I I I1. No part of the Custodial Account funds may be invested in life insurance contracts, nor may the assets of the Custodial Account be

commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5)).

2. No part of the Custodial Account funds may be invested in collectibles (within the meaning of section 408(m)) except as otherwise permitted by section 408(m)(3), which provides an exception for certain gold, silver, and platinum coins, coins issued under the laws of any state, and certain bullion.

Article IV1. Notwithstanding any provision of this agreement to the contrary, the distribution of the Participant’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 the regulations thereunder, the provisions of which are herein incorporated by reference.

2. The Participant’s entire interest in the Custodial Account must be, or begin to be, distributed not later than the Participant’s required beginning date, April 1 following the calendar year in which the Participant reaches age 70½. By that date, the Participant may elect, in a manner acceptable to the Custodian, to have the balance in the Custodial Account distributed in:

(a) A single sum or

(b) Payments over a period not longer than the life of the Participant or the joint lives of the Participant and his or her designated beneficiary.

3. If the Participant dies before his or her entire interest is distributed to him or her, the remaining interest will be distributed as follows:

(a) If the Participant dies on or after the required beginning date and:

(i) The designated beneficiary is the Participant’s surviving spouse, the remaining interest will be distributed over the surviving spouse’s life expectancy as determined each year until such spouse’s death, or over the period in paragraph (a)(iii) below if longer. Any interest remaining after the spouse’s death will be distributed over such spouse’s remaining life expectancy as determined in the year of the spouse’s death and reduced by 1 for each subsequent year, or, if distributions are being made over the period in paragraph (a)(iii) below, over such period.

SIMPLE Individual Retirement Custodial Account(Under section 408(p) of the Internal Revenue Code)

Form 5305-SA (Rev. December 2017) Department of the Treasury Internal Revenue Service

The Participant named on the Application is establishing a savings incentive match plan for employees of small employers individual retire-ment account (SIMPLE IRA) under sections 408(a) and 408(p) to provide for his or her retirement and for the support of his or her bene-ficiaries after death. The Custodian named on the Application has given the Participant the disclosure statement required by Regulations section 1.408-6.

The Participant and the Custodian make the following Agreement:

This document has been specially prepared for Timothy Plan clients. Any other use is strictly prohibited. C-300 – SIMPLE Custodial IRA (Rev. December 2017) | Copyright © 2017, Convergent Retirement Plan Solutions, LLC, Brainerd, MN 56401

FORM 5305-SASIMPLE IRA Custodial Account

DO NOT FILE with Internal Revenue Service

2

(ii) The designated beneficiary is not the Participant’s surviving spouse, the remaining interest will be distributed over the bene-ficiary’s remaining life expectancy as determined in the year following the death of the Participant and reduced by 1 for each subsequent year, or over the period in paragraph (a)(iii) below if longer.

(iii) There is no designated beneficiary, the remaining interest will be distributed over the remaining life expectancy of the Partici-pant as determined in the year of the Participant’s death and reduced by 1 for each subsequent year.

(b) If the Participant dies before the required beginning date, the remaining interest will be distributed in accordance with paragraph (i) below or, if elected or there is no designated beneficiary, in accordance with paragraph (ii) below.

(i) The remaining interest will be distributed in accordance with paragraphs (a)(i) and (a)(ii) above (but not over the period in paragraph (a)(iii), even if longer), starting by the end of the calendar year following the year of the Participant’s death. If, however, the designated beneficiary is the Participant’s surviving spouse, then this distribution is not required to begin be-fore the end of the calendar year in which the Participant would have reached age 70½. But, in such case, if the Participant’s surviving spouse dies before distributions are required to begin, then the remaining interest will be distributed in accordance with paragraph (a)(ii) above (but not over the period in paragraph (a)(iii), even if longer), over such spouse’s designated ben-eficiary’s life expectancy, or in accordance with paragraph (ii) below if there is no such designated beneficiary.

(ii) The remaining interest will be distributed by the end of the calendar year containing the fifth anniversary of the Participant’s death.

4. If the Participant dies before his or her entire interest has been distributed and if the designated beneficiary is not the Participant’s sur-viving spouse, no additional contributions may be accepted in the account.

5. The minimum amount that must be distributed each year, beginning with the year containing the Participant’s required beginning date, is known as the “required minimum distribution” and is determined as follows:

(a) The required minimum distribution under paragraph 2(b) for any year, beginning with the year the Participant reaches age 70½, is the Participant’s account value at the close of business on December 31 of the preceding year divided by the distribution period in the uniform lifetime table in Regulations section 1.401(a)(9)-9. However, if the Participant’s designated beneficiary is his or her surviving spouse, the required minimum distribution for a year shall not be more than the Participant’s account value at the close of business on December 31 of the preceding year divided by the number in the joint and last survivor table in Regulations section 1.401(a)(9)-9. The required minimum distribution for a year under this paragraph (a) is determined using the Participant’s (or, if applicable, the Participant and spouse’s) attained age (or ages) in the year.

(b) The required minimum distribution under paragraphs 3(a) and 3(b)(i) for a year, beginning with the year following the year of the Participant’s death (or the year the Participant would have reached age 70½, if applicable under paragraph 3(b)(i)) is the account value at the close of business on December 31 of the preceding year divided by the life expectancy (in the single life table in Reg-ulations section 1.401(a)(9)-9) of the individual specified in such paragraphs 3(a) and 3(b)(i).

(c) The required minimum distribution for the year the Participant reaches age 70½ can be made as late as April 1 of the following year. The required minimum distribution for any other year must be made by the end of such year.

6. The owner of two or more IRAs (other than Roth IRAs) may satisfy the minimum distribution requirements described above by taking from one IRA the amount required to satisfy the requirement for another in accordance with the regulations under section 408(a)(6).

Article V1. The Participant agrees to provide the Custodian with all information necessary to prepare any reports required by sections 408(i) and

408(l)(2) and Regulations sections 1.408-5 and 1.408-6.

2. The Custodian agrees to submit to the Internal Revenue Service (IRS) and Participant the reports prescribed by the IRS.

3. The Custodian also agrees to provide the Participant’s employer the summary description described in section 408(l)(2) unless this SIMPLE IRA is a transfer SIMPLE IRA.

Article VINotwithstanding any other articles which may be added or incorporated, the provisions of Articles I through III and this sentence will be controlling. Any additional articles inconsistent with sections 408(a) and 408(p) and the related regulations will be invalid.

Article VIIThis Agreement will be amended as necessary to comply with the provisions of the Code and the related regulations. Other amendments may be made with the consent of the persons whose signatures appear on the Application.

Article VII I1. DEFINITIONS.

Agreement. Agreement means the SIMPLE IRA Custodial Agreement (IRS Form 5305-SA), Application, Disclosure Statement, Financial Disclosure and accompanying documentation. The Agreement may be amended from time to time as provided in Article VII.

Application. Application means the document that establishes this SIMPLE IRA after acceptance by the Custodian by signing the Ap-plication. The information and statements contained in the Application are incorporated into this SIMPLE IRA Agreement.


FORM 5305-SASIMPLE Individual Retirement Custodial Account

3

Authorized Agent. Authorized Agent means the individual(s) appointed in writing by the Participant (or by the beneficiary following the Participant’s death) authorized to perform the duties and responsibilities set forth in the Agreement on behalf of the Partici-pant.

Code. Code means the Internal Revenue Code.

Custodial Account. Custodial Account means the type of legal arrangement whereby the Custodian is a qualified financial institution that agrees to maintain the Custodial Account for the exclusive benefit of the Participant and the Participant’s beneficiaries.

Custodian. The Custodian must be a bank or savings and loan association, as defined in section 408(n), or any person who has the approval of the IRS to act as Custodian.

Participant. The participant is the person who establishes the Custodial Account.

Regulations. Regulations mean the U.S. Treasury Regulations.

2. PARTICIPANT’S RESPONSIBILITIES.

All information that the Participant has provided or will provide to the Custodian under this Agreement is complete and accu-rate and the Custodian may rely upon it. The Participant will comply with all legal requirements governing this Agreement and assumes all responsibility for his or her actions including, but not limited to eligibility determination, contributions, distributions, penalty infractions, proper filing of tax returns and other issues related to activities regarding this Agreement. The Participant will provide to the Custodian the information the Custodian believes appropriate to comply with the requirements of section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (U.S.A. PA-TRIOT) Act of 2001. The Participant will pay the Custodian reasonable compensation for its services, as disclosed in the applicable fee schedules.

3. INVESTMENT RESPONSIBILITIES.

All investment decisions are the sole responsibility of the Participant and the Participant is responsible to direct the Custodian in writing, or other acceptable form and manner authorized by the Custodian, regarding how all amounts are to be invested. Subject to the policies and practices of the Custodian, the Participant may delegate investment authority by appointing an Authorized Agent in writing in a form and manner acceptable to the Custodian. Upon receipt of instructions from the Participant and proof of acceptance by the Authorized Agent, the Custodian will accept investment direction and may fully rely on those instructions as if the Custodian had received the instructions from the Participant.

The Custodian will determine the investments available within the Custodial Account. All transactions shall be subject to any and all restrictions that are imposed by the Custodian’s charter, articles of incorporation, or bylaws; any and all applicable federal and state laws and regulations; the rules, regulations, customs, and usages of any exchange, market, or clearing house where the transaction is executed; the Custodian’s policies and practices; and this Agreement. The Custodian may change its investment options from time to time and the Participant may move his or her monies in the Custodial Account to different investments. Any investment changes within the Custodial Account are subject to the terms and conditions of the investments, including but not limited to minimum deposit requirements and early redemption penalties. The Custodian will not provide any investment direc-tion, suitability recommendations, tax advice, or any other investment guidance. Further, the Custodian has no duty to question the investment directions provided by the Participant or any issues relating to the management of the Custodial Account. The Participant will indemnify and hold the Custodian harmless from and against all costs and expenses (including attorney’s fees) in-curred by the Custodian in connection with any litigation regarding the investments within the Custodial Account where the Cus-todian is named as a necessary party. The Custodian will promptly execute investment instructions received from the Participant if the instructions are in a form and manner acceptable to the Custodian. If the Custodian determines the instructions from the Participant are unclear or incomplete, the Custodian may request additional instructions. Until clear instructions are received, the Custodian reserves the right, in good faith, to leave the contribution uninvested, place the contribution in a holding account (e.g., a money market account), or return the contribution to the Participant. The Custodian will not be liable for any investment losses due to such delays in receiving clear investment instructions. Further, the Participant will indemnify and hold the Custodian harm-less for any adverse consequences or losses incurred from the Custodian’s actions or inactions relating to the investment directions received from the Participant or Authorized Agent.

The Participant will not engage in transactions not permitted under the Agreement, including, but not limited to, the investment in collectibles or life insurance contracts, or engage in a prohibited transaction under Code section 4975.

4. BENEFICIARY DESIGNATION.

The Participant has the right to designate any person(s) or entity(ies) as primary and contingent beneficiaries by completing a written designation in a form and manner acceptable to the Custodian filed with the Custodian during the Participant’s lifetime. If the Custodian and applicable laws and regulations so permit, this right also extends to the Participant’s designated beneficiaries following the Participant’s death. Any successor beneficiary so named will be entitled to the proceeds of the Custodial Account if the beneficiary dies before receiving his or her entire interest in the decedent’s IRA. A designation of successor beneficiaries sub-mitted by the Participant’s beneficiary must be in writing in a form and manner acceptable to the Custodian filed with the Custo-dian during the lifetime of the Participant’s beneficiary.



4

If the Participant is married and subject to the marital or community property laws that require the consent of the Participant’s spouse to name a beneficiary other than or in addition to such spouse, the Participant understands that he or she is responsible for any and all tax and legal ramifications and he or she should consult a competent tax and/or legal advisor before making such designation.

Upon the Participant’s death, the Custodial Account will be paid to the surviving primary beneficiaries in equal shares unless indicated otherwise in a form and manner acceptable to the Custodian. If no primary beneficiaries survive the Participant, the Custodial Account will be paid to surviving contingent beneficiaries in equal shares unless indicated otherwise. If no primary or contingent beneficiaries survive the Participant or if the Participant fails to designate beneficiaries during his or her lifetime, the Custodial Account will be paid to the Participant’s estate following the Participant’s death. No payment will be made to any bene-ficiary until the Custodian receives appropriate evidence of the Participant’s death as determined by the Custodian.

If a beneficiary entitled to payment is a minor, the Custodian is relieved of all of its obligations as Custodian by paying the Custo-dial Account to the minor’s parent or legal guardian upon receiving written instructions from such parent or legal guardian. The Participant represents and warrants that all beneficiary designations meet the applicable laws. The Custodian will exercise good faith in distributing the Participant’s Custodial Account consistent with the beneficiary designation. The Participant, for the Partic-ipant and the heirs, beneficiaries and estate of the Participant agrees to indemnify and hold the Custodian harmless against any and all claims, liabilities and expenses resulting from the Custodian’s payment of the custodial Account consistent with such bene-ficiary designation and the terms of the Agreement.

5. DISTRIBUTIONS.

The Participant may request distributions from the Custodial Account by delivering a request to the Custodian in a form and manner acceptable to the Custodian. The Custodian is not obligated to distribute the Custodial Account unless it is satisfied it has received the required information to perform its administrative and legal reporting obligations. Information the Custodian may require includes, but is not limited to, taxpayer identification number, distribution reason, and proof of identity.

The Custodian will send the Participant a notice each year the Participant is subject to the requirements of Article IV. Such notice will include the distribution deadline and will inform the Participant of the RMD amount or provide guidance to the Participant on how to contact the Custodian for assistance in determining the RMD amount. The Custodian reserves the right to determine each year the method of providing the RMD notice.

The Custodian will not be liable for and the Participant will indemnify and hold the Custodian harmless for any adverse conse-quences and/or penalties resulting from the Participant’s actions or inactions (including errors in calculations resulting from reli-ance on information provided by the Participant) with respect to determining such required minimum distributions.

6. AMENDMENTS AND TERMINATION.

The Custodian may amend this Agreement at any time to comply with legal and regulatory changes and to modify the Agree-ment as the Custodian determines advisable. Any such amendment will be sent to the Participant at the last known address on file with the Custodian. The amendment will be effective on the date specified in the notice to the Participant. At the Participant’s discretion, the Participant may direct that the Custodial Account be transferred to another trustee or custodian. The Custodian will not be liable for any losses from any actions or inactions of any successor trustee or custodian.

The Participant may terminate this Agreement at any time by providing a written notice of such termination to the Custodian in a form and manner acceptable to the Custodian. As of the date of the termination notice, the Custodian will no longer accept additional deposits under this Agreement. Upon receiving a termination notice, the Custodian will continue to hold the assets and act upon the provisions within the Agreement until the Participant provides additional instructions. If no instructions are provided by the Participant to the Custodian within 30 days of the termination notice, and unless the Custodian and Participant agree in writing otherwise, the Custodian will distribute the Custodial Account, less any applicable fees or penalties, as a single payment to the Participant. The Custodian will not be liable for any losses from any actions or inactions of any successor trustee or custodian.

The Custodian may resign at any time by providing 30 days written notice to the Participant. Upon receiving such written notice, the Participant will appoint a successor trustee or custodian in writing. Upon such appointment and upon receiving acknowledg-ment from the successor trustee or custodian of acceptance of the Custodial Account, the Custodian shall transfer the Custodial Account, less any applicable fees or penalties, to the successor trustee or custodian. If no successor trustee or custodian is ap-pointed and no distribution instructions are provided by the Participant, the Custodian may, in its own discretion, select a succes-sor trustee or custodian and transfer the Custodial Account, less any applicable fees or penalties, or may distribute the Custodial Account, less any applicable fees or penalties, as a single payment to the Participant. The Custodian shall not be liable for any losses from any actions or inactions of any successor trustee or custodian.

By establishing an individual retirement account with the Custodian, the Participant agrees to substitute another custodian or trustee in place of the existing Custodian upon notification by the Commissioner of the Internal Revenue Service or his or her delegate, that such substitution is required because the Custodian has failed to comply with the requirements of the Internal Revenue Code by not keeping such records, or making such returns or rendering such statements as are required by the Internal Revenue Code, or otherwise.



5

7. INSTRUCTIONS, CHANGES OF ADDRESSES AND NOTICES.

The Participant is responsible to provide any instructions, notices or changes of address in writing to the Custodian. Such com-munications will be effective upon actual receipt by the Custodian unless otherwise indicated in writing by the Participant. Any notices required to be sent to the Participant by the Custodian will be sent to the last address on file with the Custodian and are effective when mailed unless otherwise indicated by the Custodian. If authorized by the Custodian and provided by the Partici-pant in the Application, Custodial Account Agreement or other documentation acceptable to the Custodian, an electronic address is an acceptable address to provide and receive such communications.

8. FEES AND CHARGES.

The Custodian reserves the right to charge fees for performing its duties and meeting its obligations under this Agreement. All fees, which are subject to change from time to time, will be disclosed on the Custodian’s fee schedule or other disclosure docu-ment provided by the Custodian. The Custodian will provide the Participant 30 days written notice of any fee changes. The Cus-todian will collect all fees from the cash proceeds in the Custodial Account. If there is insufficient cash in the Custodial Account, the Custodian may liquidate investments, at its discretion, to satisfy fee obligations associated with the Agreement. Alternatively, if the Custodian so authorizes and if separate payment of fees or other expenses is permissible under applicable federal and/or state laws, the fees may be paid separately outside of the Custodial Account. If the Custodian offers investments other than de-pository products, the Participant recognizes that the Custodian may receive compensation from other parties.

The Participant agrees to pay the Custodian a reasonable hourly charge for distribution from, transfers from, and terminations of this IRA. The Participant agrees to pay any expenses incurred by the Custodian in the performance of its duties in connection with the Custodial Account. Such expenses include, but are not limited to, administrative expenses, such as legal and accounting fees, and any taxes of any kind whatsoever that may be levied or assessed with respect to such Custodial Account. All such fees, taxes and other administrative expenses charged to the Custodial Account shall be collected either from the assets in the Custo-dial Account or from any contributions to or distributions from such Custodial Account if not paid by the Participant, but the Par-ticipant shall be responsible for any deficiency. In the event that for any reason the Custodian is not certain as to who is entitled to receive all or part of the IRA, the Custodian reserves the right to withhold any payment from the IRA, to request a court ruling to determine the disposition of the IRA assets, and to charge the IRA for any expenses incurred in obtaining such legal determina-tion.

9. TRANSFERS AND ROLLOVERS.

The Custodian will accept transfers and rollovers from other plans. The Participant represents and warrants that only eligible transfers and rollovers will be made to the Custodial Account. The Custodian reserves the right to refuse any transfer or rollover and is under no obligation to accept certain investments or property it cannot legally hold or determines is an ineligible invest-ment in the Custodial Account. The Custodian will act on written instructions from the Participant received in a form and manner acceptable to the Custodian to transfer the SIMPLE IRA to a successor trustee or custodian. The Custodian is not liable for any actions or inactions by any predecessor or successor trustee or custodian or for any investment losses resulting from the timing of or sale of assets resulting from the transfer or rollover.

10. MISCELLANEOUS.

Beneficiary’s Rights.

Except as otherwise provided in this Agreement or by applicable law, all rights, duties and obligations of the Participant under the Agreement will extend to the beneficiary(ies) following the death of the Participant.

Reliance and Responsibilities.

The Participant acknowledges that he or she has the sole responsibility for any taxes, penalties or other fees and expenses as-sociated with his or her actions or inactions regarding the laws, regulations and rules associated with this Agreement. Further, the Participant acknowledges and understands that the Custodian will act solely as an agent for the Participant and bears no fiduciary responsibility. The Custodian will rely on the information provided by the Participant and has no duty to question or independently verify or investigate any such information. The Participant will indemnify and hold the Custodian harmless from any liabilities, including claims, judgments, investment losses, and expenses (including attorney’s fees), which may arise under this Agreement, except liability arising from gross negligence or willful misconduct of the Custodian.

Custodian Acquired/Merged.

If the Custodian is purchased by or merged with another financial institution qualified to serve as a trustee or custodian that insti-tution will automatically become the trustee or custodian of this IRA unless otherwise indicated.

Maintenance of Records.

The Custodian will maintain adequate records and perform its reporting obligations required under the Agreement. The Custodi-an’s sole duty to the Participant regarding reporting is to furnish the IRS mandated reports as required in Article V of this Agree-ment. The Custodian may, at its discretion, furnish additional reports or information to the Participant. The Participant approves any report furnished by the Custodian unless within 30 days of receiving the report, the Participant notifies the Custodian in writing of any discrepancies. Upon receipt of such notice, the Custodian’s responsibility is to investigate the request and make any corrections or adjustments accordingly.



Exclusive Benefit.

The Custodial Account is maintained for the exclusive benefit of the Depositor and his or her beneficiary(ies). Except as required by law, no creditors of the Depositor may at any time execute any lien, levy, assignment, attachment or garnishment on any of the assets in the Custodial Account.

Minimum Value.

The Custodian reserves the right to establish IRA account minimums. The Custodian may resign or charge additional fees if the minimums are not met.

Other Providers.

At its discretion, the Custodian may appoint other service providers to fulfill certain obligations, including reporting responsibili-ties, and may compensate such service providers accordingly.

Agreement.

This Agreement and all amendments are subject to all state and federal laws. The laws of the Custodian’s domicile will govern should any state law interpretations be necessary concerning this Agreement.

Severability.

If any part of this Agreement is invalid or in conflict with applicable law or regulations, the remaining portions of the Agreement will remain valid.

GENERAL INSTRUCTIONSSection references are to the Internal Revenue Code unless otherwise noted.

Purpose of Form. Form 5305-SA is a model Custodial Account Agreement that meets the requirements of sections 408(a) and 408(p). However, only Articles I through VII have been reviewed by the IRS. A SIMPLE individual retirement account (SIMPLE IRA) is established after the form is fully executed by both the individual (Participant) and the Custodian. This account must be created in the United States for the exclusive benefit of the Participant and his or her beneficiaries.

Do not file Form 5305-SA with the IRS. Instead, keep it with your records.

For more information on SIMPLE IRAs, including the required disclosures the Custodian must give the Participant, see Pub. 590-A, Con-tributions to Individual Retirement Arrangements (IRAs); Pub. 590-B, Distributions from Individual Retirement Arrangements (IRAs); and Pub. 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).

Transfer SIMPLE IRA. This SIMPLE IRA is a “transfer SIMPLE IRA” if it is not the original recipient of contributions under any SIMPLE IRA plan. The summary description requirements of section 408(l)(2) do not apply to transfer SIMPLE IRAs.

SPECIFIC INSTRUCTIONSArticle IV. Distributions made under this article may be made in a single sum, periodic payment, or a combination of both. The distribution option should be reviewed in the year the Participant reaches age 70½ to ensure that the requirements of section 408(a)(6) have been met.

Article VIII. Article VIII and any that follow it may incorporate additional provisions that are agreed to by the Participant and Custodian to complete the Agreement. They may include, for example, definitions, investment powers, voting rights, exculpatory provisions, amend-ment and termination, removal of the Custodian, Custodian’s fees, state law requirements, beginning date of distributions, accepting only cash, treatment of excess contributions, prohibited transactions with the Participant, etc.

6



DO NOT FILE withInternal Revenue Service

RIGHT TO REVOKE YOUR IRA As prescribed by the Code and Regulations, you may revoke

this SIMPLE IRA within seven (7) calendar days following the date the SIMPLE IRA is established. Unless indicated otherwise, the SIMPLE IRA is established on the date the Custodian signs the Application. To revoke this SIMPLE IRA, you must provide a written notice to the Custodian at the address listed on the Application (or other address provided to you by the Custodian) that accompanies this Disclosure. The Custodian must receive your revocation notice no later than 7 days after the SIMPLE IRA is established. If your revocation notice is mailed, it will be deemed received as of the postmark date. If you revoke the SIMPLE IRA within the 7-day revocation period, the Custodian is still required to report the contribution and the distribution to the IRS. If you revoke the SIMPLE IRA within the revocation period, the Custodian will return to you the entire amount you contributed without deducting any administrative fees, penalties or investment losses.

GENERAL A SIMPLE IRA plan is a tax-favored retirement plan that cer-

tain small employers may establish for the benefit of their em-ployees. Your employer has chosen to establish a SIMPLE IRA plan and will make plan contributions on your behalf to your SIMPLE IRA for each year you are eligible. Specific informa-tion regarding your eligibility to participate in your employer’s SIMPLE IRA plan is included in the summary description pro-vided to you by your employer.

CONTRIBUTIONSCash.

Except for certain rollovers and transfers, all contributions must be made in the form of money (e.g., cash, check or money order).

Type.

Contributions under a SIMPLE IRA plan are in the form of em-ployee salary deferrals, employer contributions (either match-ing or non-elective) and any other type permitted by the Code or Regulations.

Employee Deferrals.

Employee salary deferrals may not exceed the lesser of 100%

of your compensation or $12,500 (for 2017 and 2018) with possible cost-of-living adjustments each year thereafter. If you are age 50 or older by the close of the plan year, you may make an additional contribution to your SIMPLE IRA. The maximum additional contribution is $3,000 (for 2017 and 2018) with possible cost-of-living adjustments each year thereafter.

Employer Contributions.

There are two types of employer contributions: matching and non-elective employer contributions. Your employer will notify you each year of the contribution type and amount. If your employer elects matching contributions, your employer will match your deferrals up to 3% of your compensation. How-ever, in some years, a lesser amount may be contributed. Your employer will notify you if a lesser amount is contributed. Instead of matching contributions, your employer may make non-elective contributions equal to 2% of your compensation.

Rollovers.

Generally, a rollover is a movement of cash or assets from one retirement plan to another. Both the distribution and the rollover contribution are reportable when you file your income taxes, however, if you roll over the entire amount of an IRA or retirement plan distribution (including any amount withheld for federal, state, or other income taxes that you did not re-ceive), you generally do not have to report the distribution as taxable income. If you are required to take minimum distribu-tions because you are age 70½ or older, you may not roll over any required minimum distributions. You must irrevocably elect to treat such contributions as rollovers.

SIMPLE IRA-to-SIMPLE IRA Rollover. You may withdraw, tax free, all or a portion of your SIMPLE IRA if you con-tribute the amount withdrawn into the same or another SIMPLE IRA as a rollover. When completing a rollover from a SIMPLE IRA to a SIMPLE IRA, you must generally complete the rollover transaction within 60 days from the date you receive the distribution from the distributing SIMPLE IRA. Only one IRA distribution within any 12-month period may be rolled over in an IRA-to-IRA roll-over transaction. The 12-month waiting period begins on the date you receive an IRA distribution that you subse-quently roll over, not the date you complete the rollover transaction.

This Disclosure Statement provides a general review of the terms, conditions and federal laws associated with this SIMPLE IRA. It is not intended to replace the advice of your own tax and legal advisors. You are encouraged to consult with your advisors and/or your state taxing authority concerning any tax and/or compliance questions. You are responsible for complying with the laws that apply to this SIMPLE IRA. The Custodian does not act as your advisor. In addition to the transactions outlined in this SIMPLE IRA Disclosure Statement, the federal government may authorize permissible transactions from time to time. Unless expressly prohibited by the Custodian’s policies, such additional federally authorized transactions are hereby incorporated by this reference.

USED WITH IRS FORM 5305-SASIMPLE IRA Disclosure Statement

7


SIMPLE IRA-to-Traditional IRA Rollover. You may with-draw, tax free, all or a portion of your SIMPLE IRA, if you contribute the amount withdrawn into a Traditional IRA as a rollover. When completing a rollover from a SIMPLE IRA to a Traditional IRA, you must generally complete the rollover transaction within 60 days from the date you re-ceive the distribution from the SIMPLE IRA. To complete a rollover of a SIMPLE IRA distribution to a Traditional IRA, at least two years must have elapsed from the date on which you first participated in any SIMPLE IRA plan maintained by the employer. Only one IRA distribution within any 12-month period may be rolled over in an IRA-to-IRA rollover transaction. The 12-month waiting period begins on the date you receive an IRA distribution that you subsequently roll over, not the date you com-plete the rollover transaction.

SIMPLE IRA-to-Employer Retirement Plan Rollover. If your employer’s retirement plan accepts rollovers from IRAs, you may complete a direct or indirect rollover of your SIMPLE IRA assets to your employer retirement plan if at least two years have elapsed from the date on which you first participated in any SIMPLE IRA plan maintained by the employer. If you take constructive receipt of a distribution from your SIMPLE IRA to complete a rollover to an employer plan (i.e., an indirect rollover), you must generally complete the rollover transaction within 60 days from the date you receive the distribution.

Traditional IRA-to-SIMPLE IRA Rollover. An amount distributed from your Traditional IRA may be rolled over to your SIMPLE IRA only after at least two years have elapsed from the date on which you first participated in any SIMPLE IRA Plan maintained by the employer. When completing a rollover from a Traditional IRA to a SIMPLE IRA, you must generally complete the rollover transaction within 60 days from the date you receive the distribution from your Traditional IRA. Only one IRA distribution within any 12-month period may be rolled over in an IRA-to-IRA rollover transaction. The 12-month waiting period begins on the date you receive an IRA distribution that you subsequently roll over, not the date you com-plete the rollover transaction.

Employer Retirement Plan-to-SIMPLE IRA. Eligible roll-over distributions from qualifying employer retirement plans may be rolled over, directly or indirectly, to your SIMPLE IRA only after at least two years have elapsed from the date on which you first participated in any SIMPLE IRA plan maintained by the employer. Quali-fying employer retirement plans include qualified plans (e.g., 401(k) plans or profit sharing plans), governmental 457(b) plans, 403(b) arrangements and 403(a) arrange-ments. Amounts that may not be rolled over to your SIMPLE IRA include any required minimum distributions, hardship distributions, any part of a series of substantially equal periodic payments, or distributions consisting of designated Roth contributions (and earnings thereon) from a 401(k), 403(b) or 457(b) plan.

To complete a direct rollover from an employer plan to your SIMPLE IRA, you must generally instruct the plan administrator to send the distribution to your SIMPLE IRA Custodian. To complete an indirect rollover to your SIMPLE IRA, you must generally request that the plan administrator make a distribution directly to you. You typically have 60 days from the date you receive an eligi-

ble rollover distribution to complete an indirect rollover. Any amount not properly rolled over within the 60-day period will generally be taxable in the year distributed (except for any amount that represents after-tax contri-butions) and may be, if you are under age 59½, subject to the premature distribution penalty tax. If you choose the indirect rollover method, the plan administrator is typically required to withhold 20% of the eligible rollover distribution amount for purposes of federal income tax withholding. You may, however, make up the withheld amount out of pocket and roll over the full amount. If you do not make up the withheld amount out of pocket, the 20% withheld (and not rolled over) will be treated as a distribution, subject to applicable taxes and penalties.

Conversion of SIMPLE IRA to Roth IRA.

Generally, if after you have been a SIMPLE IRA plan participant for two years, you may convert all or a portion of your SIMPLE IRA to a Roth IRA provided you meet any applicable eligibility requirements as defined in the Code and Regulations. Except for amounts that represent basis, amounts converted are gen-erally treated as taxable distributions. However, the premature distribution penalty that typically applies to taxable withdraw-als taken prior to age 59½, does not apply to amounts con-verted from a SIMPLE IRA to a Roth IRA. Required minimum distributions may not be converted. SIMPLE IRA-to-Roth IRA conversions are not subject to the 12-month rollover restriction that typically applies to rollovers between IRAs.

Recharacterize a Conversion.

You may “recharacterize” a conversion made from your SIM-PLE IRA to a Roth IRA. Both the conversion amount along with the net income attributable to the conversion must be transferred. If there was a loss, the amount of any loss will reduce the amount you recharacterize. The deadline for com-pleting a recharacterization is your tax return due date (includ-ing any extensions) for the year in which the distribution that was converted was withdrawn.

Recharacterization requests must be made in a form and man-ner acceptable to the Custodian. Report recharacterizations to the IRS by attaching a statement to your Form 1040. You may also need to file Form 8606.

Reconversion.

A reconversion occurs when you convert SIMPLE IRA assets that have been previously converted and recharacterized. A reconversion must occur in a subsequent year to the conver-sion, or if later, after 30 days has elapsed since the recharac-terization.

TRANSFERS You may move your SIMPLE IRA from one trustee or cus-

todian to a SIMPLE IRA maintained by another trustee or custodian by requesting a direct transfer. Because the transfer is done directly between IRA trustees or custodians and no distribution is made to you, the transfer is neither taxable nor reportable. Federal law does not limit the number of transfers you may make during any one year.

FORM 5305-SASIMPLE IRA Disclosure Statement

8


Transfers Incident to Divorce.

Under a valid divorce decree, separate maintenance decree, or other valid court order, your SIMPLE IRA may be transferred to your ex-spouse or you may receive all or part of your ex-spouse’s SIMPLE IRA.

TAX TREATMENT OF SIMPLE IRA CONTRIBUTIONSNo Deduction.

No tax deduction is allowed for either your salary deferrals or your employer contributions. Amounts you elect to defer re-duce your taxable income for the year. When you participate in your employer’s SIMPLE IRA plan, you are considered an “ac-tive participant” in a retirement plan that may affect your ability to deduct contributions you make to your Traditional IRA.

Tax Credit.

You may be eligible for a tax credit for your salary deferrals to your SIMPLE IRA. The maximum annual tax credit is $1,000, and if you are eligible, the credit will reduce the federal in-come tax you owe dollar for dollar. You may be eligible for the tax credit if you are age 18 or older, not a dependent of another taxpayer, and not a full-time student.

DISTRIBUTIONS DURING YOUR LIFETIME You may withdraw any or all of your SIMPLE IRA balance at

any time. However, certain taxes and penalties may apply.

Tax Treatment.

In general, distributions from your SIMPLE IRA are taxed as ordinary income in the year in which they are distributed. If you have made nondeductible contributions to a Traditional IRA, a portion of each distribution from your SIMPLE IRA is nontaxable. The nontaxable amount is the pro rata portion of the distribution that represents your remaining nondeductible contributions based upon the value of all your IRAs. For as-sistance in determining the nontaxable portion, consult your tax advisor, instructions to IRS Forms 1040 and 8606, and IRS Publication 590-B.

Distributions Before Age 59½.

Generally, if you are under age 59½ and take a distribution, the amount is referred to as an “early or premature distri-bution.” Premature distributions that are includible in gross income are also subject to a 10% IRS penalty tax. The prema-ture distribution penalty is increased to 25% on any distribu-tions taken before you have been a SIMPLE IRA participant for two years. The two-year waiting period begins on the first day you participated in your employer’s SIMPLE IRA plan. How-ever, certain exceptions apply to the premature distribution penalty. These are summarized below.

1. You have unreimbursed medical expenses that are more than the applicable percentage of your adjusted gross income and provided certain conditions apply.

2. The distribution is to pay your medical insurance premiums if you are unemployed and receive federal or state unemploy-ment benefits for 12 consecutive weeks, or would have if not self-employed, and you receive the distribution during that or the succeeding tax year.

3. A physician certifies that you are disabled as defined by the Code.

4. You are receiving substantially equal periodic payments con-sistent with the Code and Regulations.

5. The distributions are not more than the qualified higher edu-cation expenses of you, your spouse, or the children or grand-children of you or your spouse.

6. The distribution, of up to a $10,000 lifetime limit, is used within 120 days of withdrawal to buy or build a home that will be a principal residence for a qualified first-time homebuyer.

7. The distribution is due to an IRS levy on the SIMPLE IRA.

8. The distribution is a “qualified reservist distribution” as de-fined by the Code.

9. The distribution is properly rolled over or directly transferred to an eligible employer plan, Traditional IRA or another SIM-PLE IRA.

10. The distribution is a proper return of a certain excess contribution.

Reporting Premature Distribution Penalty Tax.

You may have to report the IRS early distribution penalty tax by filing a completed Form 5329 with the IRS along with your payment.

Distributions After Age 59½ and Before the Year You Reach Age 70½.

Once you reach age 59½ but before the year you reach age 70½, distributions from your SIMPLE IRA are optional and amounts you withdraw and keep during this period will gen-erally be subject to ordinary income tax.

Required Distributions At Age 70½.

You must begin taking distributions from your SIMPLE IRA no later than April 1 following the year you reach age 70½. Subsequent distributions must be taken by December 31 each year after you reach age 70½. Generally, each year determine your RMD by taking your SIMPLE IRA balance as of Decem-ber 31 of the prior year and dividing it by a distribution period (determined by the applicable IRS life expectancy table). Each year you are subject to the RMD requirements, your Custo-dian will provide you with a notice. Along with the distribu-tion deadline, the notice will either inform you of your RMD amount or provide you with guidance on how to contact the Custodian for assistance in determining your RMD. Your Custodian is also required to notify the IRS each year you are required to take an RMD.

If you have more than one SIMPLE IRA, you must determine the RMD separately for each SIMPLE IRA. However, you may total the RMDs and take the total from any one or more of your IRAs.

If you do not take the required minimum distribution (RMD) or the distribution is not large enough, you may be subject to a 50% excess accumulation penalty tax on the amount not distributed as required. You must report the 50% excess ac-cumulation penalty tax by filing a completed Form 5329 with the IRS along with your payment.

For additional information regarding your RMD, consult your tax advisor and/or IRS Publication 590-B.


9


Special Tax Treatment.

IRA distributions are not eligible for capital gains treatment or lump-sum income averaging.

DISTRIBUTIONS TO YOUR BENEFICIARIES WHEN YOU DIE Any amounts remaining in your SIMPLE IRA at your death

will be paid to your beneficiary(ies). When you die, the rules determining the distribution of your SIMPLE IRA balance de-pend on a number of factors, including whether you had a “designated beneficiary,” your relationship to the beneficiary (spouse or nonspouse) and whether you died before or after RMDs were required to begin.

Designated Beneficiary.

A “designated beneficiary” is determined based on the benefi-ciary(ies) designated as of the date of your death and who re-mains your beneficiary(ies) on September 30th of the calendar year following the calendar year of your death.

If You Die Before RMDs Are Required To Begin.

Generally, if you die before April 1 following the year you reach age 70½ and your designated beneficiary(ies) is an individual, he or she may elect a distribution method. Your beneficiary(ies) may elect to deplete the SIMPLE IRA by the end of the fifth calendar year following your death or to re-ceive payments based on the designated beneficiary(ies)’s life expectancy. If life expectancy payments are elected, the pay-ments must begin by December 31 of the first calendar year following your death. However, if your surviving spouse is your sole designated beneficiary, he or she may delay the first distribution until December 31 of the year you would have attained age 70½ if later.

If your designated beneficiary is not an individual or a qualified trust (e.g., a charity, your estate, etc.), your SIMPLE IRA must be distributed by the end of the fifth calendar year following your death.

Generally, each beneficiary may elect the timing and manner regarding the distribution of his or her portion of the SIMPLE IRA. Elections must generally be made by December 31 of the year following your death. If timely elections are not made, your beneficiary is required to take distributions according to the applicable default provision. The default distribution option for designated beneficiaries who are individuals is the life expec-tancy option and the default distribution option for designated beneficiaries that are not individuals is the 5-year method. If your beneficiary(ies) does not withdraw the required amount within the prescribed time frame, he or she may be subject to the 50% excess accumulation penalty tax on the amount that should have been withdrawn but was not distributed.

If your surviving spouse is the sole designated beneficiary of your SIMPLE IRA, he or she may treat your SIMPLE IRA as his or her own. Regardless of whether your spouse is the sole des-ignated beneficiary, he or she may roll distributions from your IRA into his or her own IRA generally within 60 days of receipt. Additional restrictions may apply.

If You Die On or After RMDs Are Required To Begin.

If you die on or after April 1 following the year you attain age 70½, the designated beneficiary(ies) must continue taking dis-tributions from your SIMPLE IRA. The longest time frame for receiving payouts is over the remaining life expectancy of the applicable designated beneficiary or based on your remaining life expectancy factor, had you not died, whichever period is longer. Distributions must commence by December 31 of the calendar year following your death. If your designated benefi-ciary is not an individual or a qualified trust (e.g., a charity, your estate, etc.), your SIMPLE IRA must be distributed using your single life expectancy (had you not died) reduced by one each year. Your beneficiary(ies) must withdraw your RMD for the year of your death, if you do not withdraw it before your death.

If your surviving spouse is the sole designated beneficiary of your SIMPLE IRA, he or she may treat your SIMPLE IRA as his or her own. Regardless of whether your spouse is the sole des-ignated beneficiary, he or she may roll distributions from your IRA into his or her own IRA generally within 60 days of receipt. Additional restrictions may apply.

WITHHOLDING Nonperiodic, distributions from your SIMPLE IRA are subject to

10% federal income tax withholding unless you elect to waive withholding. You may elect in writing to waive withholding, in which case, no taxes will be withheld from your distribution. If you elect not to have withholding applied, or if you do not have enough federal income tax withheld from your IRA distri-bution, you may be responsible for payment of estimated tax. Any amounts withheld are remitted to federal depositories in prepayment of your federal income tax liability. In addition to federal income tax withholding, distributions from IRAs may also be subject to state income tax withholding.

EXCESS CONTRIBUTIONS An excess may be created from your salary deferrals or from

your employer’s contributions (either matching or nonelec-tive).

PROHIBITED TRANSACTIONS If you (or your beneficiary(ies) when you die) engage in a

“prohibited transaction” with your SIMPLE IRA, the SIMPLE IRA will be disqualified and the entire SIMPLE IRA will be treated as a distribution. If you are under age 59½, the 10% premature distribution penalty tax may apply. Prohibited transactions are defined in Code section 4975. Examples in-clude borrowing money from the SIMPLE IRA, selling property to the SIMPLE IRA, receiving unreasonable compensation for managing the SIMPLE IRA, or buying property with SIMPLE IRA funds for your personal use.

USING YOUR SIMPLE IRA AS SECURITY FOR A LOAN If you (or your beneficiary(ies) when you die) pledge all or

part of your SIMPLE IRA as security for a loan, the amount pledged is treated as a distribution. If you are under age 59½, the amount pledged may also be subject to the premature dis-tribution penalty tax.


10


MISCELLANEOUSNonforfeitability.

Your interest in your SIMPLE IRA is nonforfeitable at all times.

Custodian.

The Custodian of your SIMPLE IRA must be a bank, a federally insured credit union, a savings and loan association, or an en-tity approved by the IRS to act as custodian.

Investment Restrictions.

Money in your SIMPLE IRA may not be used to buy a life insurance policy or invested in collectibles as defined in Code section 408(m). However, certain gold, silver and platinum coins, bullion and coins issued under state laws are allowable investments.

No Commingling.

Assets in your SIMPLE IRA may not be combined with other property, except in a common trust fund or common invest-ment fund.

Beneficiary Designation.

You may designate a beneficiary for your SIMPLE IRA by com-pleting a written designation in a form and manner acceptable to the Custodian. When you die, the proceeds of your SIMPLE IRA will be paid to your designated beneficiary(ies). If you do not designate a beneficiary, your SIMPLE IRA will be paid to your estate when you die.

Tax-Deferred Earnings.

The earnings on your SIMPLE IRA balance accumulate tax-de-ferred, meaning they are not taxable until distributed from your SIMPLE IRA.

Estate Tax.

Generally, for federal estate tax purposes, your SIMPLE IRA assets are includable in your gross estate when you die. Con-sult your tax and/or legal advisors for specific guidance.

Tax Filing.

You are responsible for filing the applicable IRS forms to re-port certain activities, any taxable income and/or penalties associated with your SIMPLE IRA.

IRS Form.

This SIMPLE IRA uses the precise language of Articles I-VII of IRS Form 5305-SA, and therefore Articles I-VII are treated as approved by the IRS. Additional language has been included as permitted by such form. The IRS approval represents a de-termination as to form and not to the merits of the account.

Additional Information.

Additional information about the rules and options regard-ing your SIMPLE IRA may be found in IRS Publications 560, 590-A and 590-B, the summary description provided by your employer and on the IRS website at www.irs.gov.

11



Form 5304-SIMPLE(Rev. March 2012)

Department of the Treasury Internal Revenue Service

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)—Not

for Use With a Designated Financial Institution

OMB No. 1545-1502

Do not file

with the Internal Revenue Service

Name of Employer establishes the following SIMPLE

IRA plan under section 408(p) of the Internal Revenue Code and pursuant to the instructions contained in this form.

Article I—Employee Eligibility Requirements (complete applicable box(es) and blanks—see instructions) 1 General Eligibility Requirements. The Employer agrees to permit salary reduction contributions to be made in each calendar year to the

SIMPLE IRA established by each employee who meets the following requirements (select either 1a or 1b):

a Full Eligibility. All employees are eligible.

b Limited Eligibility. Eligibility is limited to employees who are described in both (i) and (ii) below: (i) Current compensation. Employees who are reasonably expected to receive at least $ in compensation

(not to exceed $5,000) for the calendar year.

(ii) Prior compensation. Employees who have received at least $ in compensation (not to exceed $5,000)

during any calendar year(s) (insert 0, 1, or 2) preceding the calendar year. 2 Excludable Employees.

The Employer elects to exclude employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining. Note: This box is deemed checked if the Employer maintains a qualified plan covering only such employees.

Article II—Salary Reduction Agreements (complete the box and blank, if applicable—see instructions) 1 Salary Reduction Election. An eligible employee may make an election to have his or her compensation for each pay period reduced. The

total amount of the reduction in the employee’s compensation for a calendar year cannot exceed the applicable amount for that year. 2 Timing of Salary Reduction Elections

a For a calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible or the day before.

b In addition to the election periods in 2a, eligible employees may make salary reduction elections or modify prior elections , . If the Employer chooses

this option, insert a period or periods (for example, semi-annually, quarterly, monthly, or daily) that will apply uniformly to all eligible employees.

c No salary reduction election may apply to compensation that an employee received, or had a right to immediately receive, before execution of the salary reduction election.

d An employee may terminate a salary reduction election at any time during the calendar year. If this box is checked, an employee who terminates a salary reduction election not in accordance with 2b may not resume salary reduction contributions during the calendar year.

Article III—Contributions (complete the blank, if applicable—see instructions) 1 Salary Reduction Contributions. The amount by which the employee agrees to reduce his or her compensation will be contributed by the

Employer to the employee’s SIMPLE IRA. 2 a Matching Contributions

(i) For each calendar year, the Employer will contribute a matching contribution to each eligible employee’s SIMPLE IRA equal to theemployee’s salary reduction contributions up to a limit of 3% of the employee’s compensation for the calendar year.

(ii) The Employer may reduce the 3% limit for the calendar year in (i) only if:

(1) The limit is not reduced below 1%; (2) The limit is not reduced for more than 2 calendar years during the 5-year period ending with thecalendar year the reduction is effective; and (3) Each employee is notified of the reduced limit within a reasonable period of time before theemployees’ 60-day election period for the calendar year (described in Article II, item 2a).

b Nonelective Contributions

(i) For any calendar year, instead of making matching contributions, the Employer may make nonelective contributions equal to 2% ofcompensation for the calendar year to the SIMPLE IRA of each eligible employee who has at least $ , (not morethan $5,000) in compensation for the calendar year. No more than $250,000* in compensation can be taken into account in determiningthe nonelective contribution for each eligible employee.

(ii) For any calendar year, the Employer may make 2% nonelective contributions instead of matching contributions only if:(1) Each eligible employee is notified that a 2% nonelective contribution will be made instead of a matching contribution; and(2) This notification is provided within a reasonable period of time before the employees’ 60-day election period for the calendar year

(described in Article II, item 2a).3 Time and Manner of Contributions

a The Employer will make the salary reduction contributions (described in 1 above) for each eligible employee to the SIMPLE IRA established at the financial institution selected by that employee no later than 30 days after the end of the month in which the money is withheld from the employee’s pay. See instructions.

b The Employer will make the matching or nonelective contributions (described in 2a and 2b above) for each eligible employee to the SIMPLE IRA established at the financial institution selected by that employee no later than the due date for filing the Employer’s tax return, including extensions, for the taxable year that includes the last day of the calendar year for which the contributions are made.

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue Bulletin, and on the IRS’s internet website at IRS.gov.

For Paperwork Reduction Act Notice, see the instructions. Cat. No. 23377W Form 5304-SIMPLE (Rev. 3-2012)

Form 5304-SIMPLE (Rev. 3-2012) Page 2

Article IV—Other Requirements and Provisions

1 Contributions in General. The Employer will make no contributions to the SIMPLE IRAs other than salary reduction contributions (described in Article III, item 1) and matching or nonelective contributions (described in Article III, items 2a and 2b).

2 Vesting Requirements. All contributions made under this SIMPLE IRA plan are fully vested and nonforfeitable.

3 No Withdrawal Restrictions. The Employer may not require the employee to retain any portion of the contributions in his or her SIMPLE IRA or otherwise impose any withdrawal restrictions.

4 Selection of IRA Trustee. The Employer must permit each eligible employee to select the financial institution that will serve as the trustee, custodian, or issuer of the SIMPLE IRA to which the Employer will make all contributions on behalf of that employee.

5 Amendments To This SIMPLE IRA Plan. This SIMPLE IRA plan may not be amended except to modify the entries inserted in the blanks or boxes provided in Articles I, II, III, VI, and VII.

6 Effects Of Withdrawals and Rollovers

a An amount withdrawn from the SIMPLE IRA is generally includible in gross income. However, a SIMPLE IRA balance may be rolled over or transferred on a tax-free basis to another IRA designed solely to hold funds under a SIMPLE IRA plan. In addition, an individual may roll over or transfer his or her SIMPLE IRA balance to any IRA or eligible retirement plan after a 2-year period has expired since the individual first participated in any SIMPLE IRA plan of the Employer. Any rollover or transfer must comply with the requirements under section 408.

b If an individual withdraws an amount from a SIMPLE IRA during the 2-year period beginning when the individual first participated in any SIMPLE IRA plan of the Employer and the amount is subject to the additional tax on early distributions under section 72(t), this additional tax is increased from 10% to 25%.

Article V—Definitions

1 Compensation

a General Definition of Compensation. Compensation means the sum of the wages, tips, and other compensation from the Employer subject to federal income tax withholding (as described in section 6051(a)(3)), the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority, and the employee’s salary reduction contributions made under this plan, and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the Employer on Form W-2 (as described in section 6051(a)(8)).

b Compensation for Self-Employed Individuals. For self-employed individuals, compensation means the net earnings from self-employment determined under section 1402(a), without regard to section 1402(c)(6), prior to subtracting any contributions made pursuant to this plan on behalf of the individual.

2 Employee. Employee means a common-law employee of the Employer. The term employee also includes a self-employed individual and a leased employee described in section 414(n) but does not include a nonresident alien who received no earned income from the Employer that constitutes income from sources within the United States.

3 Eligible Employee. An eligible employee means an employee who satisfies the conditions in Article I, item 1 and is not excluded under Article I, item 2.

4 SIMPLE IRA. A SIMPLE IRA is an individual retirement account described in section 408(a), or an individual retirement annuity described in section 408(b), to which the only contributions that can be made are contributions under a SIMPLE IRA plan and rollovers or transfers from another SIMPLE IRA.

Article VI—Procedures for Withdrawals (The Employer will provide each employee with the procedures for withdrawals of contributions received by the financial institution selected by that employee, and that financial institution’s name and address (by attaching that information or inserting it in the space below) unless: (1) that financial institution’s procedures are unavailable, or (2) that financial institution provides the procedures directly to the employee. See Employee Notification in the instructions.)

Article VII—Effective Date

This SIMPLE IRA plan is effective . See instructions.

* * * * *

Name of Employer

Address of Employer

By: Signature Date

Name and title

Form 5304-SIMPLE (Rev. 3-2012)


Model Notification to Eligible Employees

I. Opportunity to Participate in the SIMPLE IRA Plan

You are eligible to make salary reduction contributions to the SIMPLE IRA plan. This notice and the attached summary description provide you with information that you should consider before you decide whether to start, continue, or change your salary reduction agreement.

II. Employer Contribution Election

For the calendar year, the Employer elects to contribute to your SIMPLE IRA (employer must select either (1), (2), or (3)):

(1) A matching contribution equal to your salary reduction contributions up to a limit of 3% of your compensation for the year;

(2) A matching contribution equal to your salary reduction contributions up to a limit of % (employer must insert a number from 1 to 3 and is subject to certain restrictions) of your compensation for the year; or (3) A nonelective contribution equal to 2% of your compensation for the year (limited to compensation of $250,000*) if you are an employee who makes at least $ (employer must insert an amount that is $5,000 or less) in compensation for the year.

III. Administrative Procedures

To start or change your salary reduction contributions, you must complete the salary reduction agreement and return it to (employer should designate a place or individual by (employer should insert a date that is not less than 60 days after notice is given).

IV. Employee Selection of Financial Institution

You must select the financial institution that will serve as the trustee, custodian, or issuer of your SIMPLE IRA and notify your Employer of your selection.

Model Salary Reduction Agreement

I. Salary Reduction Election

Subject to the requirements of the SIMPLE IRA plan of (name of

employer) I authorize % or $ (which equals % of my current rate of pay) to be withheld from my pay for each pay period and contributed to my SIMPLE IRA as a salary reduction contribution.

II. Maximum Salary Reduction

I understand that the total amount of my salary reduction contributions in any calendar year cannot exceed the applicable amount for that year. See instructions.

III. Date Salary Reduction Begins

I understand that my salary reduction contributions will start as soon as permitted under the SIMPLE IRA plan and as soon as administratively feasible or, if later, . (Fill in the date you want the salary reduction contributions to begin. The date must be after you sign this agreement.) IV. Employee Selection of Financial Institution

I select the following financial institution to serve as the trustee, custodian, or issuer of my SIMPLE IRA.

Name of financial institution

Address of financial institution

SIMPLE IRA account name and number

I understand that I must establish a SIMPLE IRA to receive any contributions made on my behalf under this SIMPLE IRA plan. If the information regarding my SIMPLE IRA is incomplete when I first submit my salary reduction agreement, I realize that it must be completed by the date contributions must be made under the SIMPLE IRA plan. If I fail to update my agreement to provide this information by that date, I understand that my Employer may select a financial institution for my SIMPLE IRA.

V. Duration of Election

This salary reduction agreement replaces any earlier agreement and will remain in effect as long as I remain an eligible employee under the SIMPLE IRA plan or until I provide my Employer with a request to end my salary reduction contributions or provide a new salary reduction agreement as permitted under this SIMPLE IRA plan.

Signature of employee Date

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue Bulletin, and on the IRS website at IRS.gov.



General Instructions Section references are to the Internal Revenue Code unless otherwise noted.

Purpose of Form

Form 5304-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document that an employer may use to establish a SIMPLE IRA plan described in section 408(p), under which each eligible employee is permitted to select the financial institution for his or her SIMPLE IRA.

These instructions are designed to assist in the establishment and administration of the SIMPLE IRA plan. They are not intended to supersede any provision in the SIMPLE IRA plan.

Do not file Form 5304-SIMPLE with the IRS. Instead, keep it with your records.

For more information, see Pub. 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), and Pub. 590, Individual Retirement Arrangements (IRAs).

Note. If you used the March 2002, August 2005, or September 2008 version of Form 5304-SIMPLE to establish a model Savings Incentive Match Plan, you are not required to use this version of the form.

Which Employers May Establish and Maintain a SIMPLE IRA Plan?

To establish and maintain a SIMPLE IRA plan, you must meet both of the following requirements:

1. Last calendar year, you had no more than 100 employees (including self-employed individuals) who earned $5,000 or more in compensation from you during the year. If you have a SIMPLE IRA plan but later exceed this 100-employee limit, you will be treated as meeting the limit for the 2 years following the calendar year in which you last satisfied the limit.

2. You do not maintain during any part of the calendar year another qualified plan with respect to which contributions are made, or benefits are accrued, for service in the calendar year. For this purpose, a qualified plan (defined in section 219(g)(5)) includes a qualified pension plan, a profit-sharing plan, a stock bonus plan, a qualified annuity plan, a tax-sheltered annuity plan, and a simplified employee pension (SEP) plan. A qualified plan that only covers employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining is disregarded if these employees are excluded from

participating in the SIMPLE IRA plan. If the failure to continue to satisfy the 100-employee limit or the one-plan rule described in 1 and 2 above is due to an acquisition or similar transaction involving your business, special rules apply. Consult your tax advisor to find out if you can still maintain the plan after the transaction.

Certain related employers (trades or businesses under common control) must be treated as a single employer for purposes of the SIMPLE IRA requirements. These are: (1) a controlled group of corporations under section 414(b); (2) a partnership or sole proprietorship under common control under section 414(c); or (3) an affiliated service group under section 414(m). In addition, if you have leased employees required to be treated as your own employees under the rules of section 414(n), then you must count all such leased employees for the requirements listed above.

What Is a SIMPLE IRA Plan?

A SIMPLE IRA plan is a written arrangement that provides you and your employees with an easy way to make contributions to provide retirement income for your employees. Under a SIMPLE IRA plan, employees may choose whether to make salary reduction contributions to the SIMPLE IRA plan rather than receiving these amounts as part of their regular compensation. In addition, you will contribute matching or nonelective contributions on behalf of eligible employees (see Employee Eligibility Requirements below and Contributions later). All contributions under this plan will be deposited into a SIMPLE individual retirement account or annuity established for each eligible employee with the financial institution selected by him or her.

When To Use Form 5304-SIMPLE

A SIMPLE IRA plan may be established by using this Model Form or any other document that satisfies the statutory requirements.

Do not use Form 5304-SIMPLE if: 1. You want to require that all SIMPLE

IRA plan contributions initially go to a financial institution designated by you. That is, you do not want to permit each of your eligible employees to choose a financial institution that will initially receive contributions. Instead, use Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)—for Use With a Designated Financial Institution;

2. You want employees who are nonresident aliens receiving no earned income from you that is income from sources within the United States to be eligible under this plan; or

3. You want to establish a SIMPLE 401(k) plan.

Completing Form 5304-SIMPLE

Pages 1 and 2 of Form 5304-SIMPLE contain the operative provisions of your SIMPLE IRA plan. This SIMPLE IRA plan is considered adopted when you have completed all applicable boxes and blanks and it has been executed by you.

The SIMPLE IRA plan is a legal document with important tax consequences for you and your employees. You may want to consult with your attorney or tax advisor before adopting this plan.

Employee Eligibility Requirements (Article I)

Each year for which this SIMPLE IRA plan is effective, you must permit salary reduction contributions to be made by all of your employees who are reasonably expected to receive at least $5,000 in compensation from you during the year, and who received at least $5,000 in compensation from you in any 2 preceding years. However, you can expand the group of employees who are eligible to participate in the SIMPLE IRA plan by completing the options provided in Article I, items 1a and 1b. To choose full eligibility, check the box in Article I, item 1a. Alternatively, to choose limited eligibility, check the box in Article I, item 1b, and then insert “$5,000” or a lower compensation amount (including zero) and “2” or a lower number of years of service in the blanks in (i) and (ii) of Article I, item 1b.

In addition, you can exclude from participation those employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining. You may do this by checking the box in Article I, item 2. Under certain circumstances, these employees must be excluded. See Which Employers May Establish and Maintain a SIMPLE IRA Plan? above.

Salary Reduction Agreements (Article II)

As indicated in Article II, item 1, a salary reduction agreement permits an eligible employee to make a salary reduction election to have his or her compensation for each pay period reduced by a percentage (expressed as a percentage or dollar amount). The total amount of


the reduction in the employee’s compensation cannot exceed the applicable amount for any calendar year. The applicable amount is $11,500 for 2012. After 2012, the $11,500 amount may be increased for cost-of-living adjustments. In the case of an eligible employee who is 50 or older by the end of the calendar year, the above limitation is increased by $2,500 for 2012. After 2012, the $2,500 amount may be increased for cost-of-living adjustments.

Timing of Salary Reduction Elections

For any calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible or the day before.

You can extend the 60-day election periods to provide additional opportunities for eligible employees to make or modify salary reduction elections using the blank in Article II, item 2b. For example, you can provide that eligible employees may make new salary reduction elections or modify prior elections for any calendar quarter during the 30 days before that quarter.

You may use the Model Salary Reduction Agreement on page 3 to enable eligible employees to make or modify salary reduction elections.

Employees must be permitted to terminate their salary reduction elections at any time. They may resume salary reduction contributions for the year if permitted under Article II, item 2b. However, by checking the box in Article II, item 2d, you may prohibit an employee who terminates a salary reduction election outside the normal election cycle from resuming salary reduction contributions during the remainder of the calendar year.

Contributions (Article III)

Only contributions described below may be made to this SIMPLE IRA plan. No additional contributions may be made.

Salary Reduction Contributions

As indicated in Article III, item 1, salary reduction contributions consist of the amount by which the employee agrees to reduce his or her compensation. You must contribute the salary reduction contributions to the financial institution selected by each eligible employee.

Matching Contributions

In general, you must contribute a matching contribution to each eligible employee’s SIMPLE IRA equal to the employee’s salary reduction contributions. This matching contribution cannot exceed 3% of the employee’s compensation. See Definition of Compensation, below.

You may reduce this 3% limit to a lower percentage, but not lower than 1%. You cannot lower the 3% limit for more than 2 calendar years out of the 5-year period ending with the calendar year the reduction is effective.

Note. If any year in the 5-year period described above is a year before you first established any SIMPLE IRA plan, you will be treated as making a 3% matching contribution for that year for purposes of determining when you may reduce the employer matching contribution.

To elect this option, you must notify the employees of the reduced limit within a reasonable period of time before the applicable 60-day election periods for the year. See Timing of Salary Reduction Elections above.

Nonelective Contributions

Instead of making a matching contribution, you may, for any year, make a nonelective contribution equal to 2% of compensation for each eligible employee who has at least $5,000 in compensation for the year. Nonelective contributions may not be based on more than $250,000* of compensation.

To elect to make nonelective contributions, you must notify employees within a reasonable period of time before the applicable 60-day election periods for such year. See Timing of Salary Reduction Elections above.

Note. Insert “$5,000” in Article III, item 2b(i) to impose the $5,000 compensation requirement. You may expand the group of employees who are eligible for nonelective contributions by inserting a compensation amount lower than $5,000.

Effective Date (Article VII)

Insert in Article VII the date you want the provisions of the SIMPLE IRA plan to become effective. You must insert January 1 of the applicable year unless this is the first year for which you are adopting any SIMPLE IRA plan. If this is the first year for which you are adopting a SIMPLE IRA plan, you may insert any date between January 1 and October 1, inclusive of the applicable year.

Additional Information

Timing of Salary Reduction Contributions

The employer must make the salary reduction contributions to the financial institution selected by each eligible employee for his or her SIMPLE IRA no later than the 30th day of the month following the month in which the amounts would otherwise have been payable to the employee in cash.

The Department of Labor has indicated that most SIMPLE IRA plans are also subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Under Department of Labor regulations at 29 CFR 2510.3-102, salary reduction contributions must be made to each participant’s SIMPLE IRA as of the earliest date on which those contributions can reasonably be segregated from the employer’s general assets, but in no event later than the 30-day deadline described previously.

Definition of Compensation

“Compensation” means the amount described in section 6051(a)(3) (wages, tips, and other compensation from the employer subject to federal income tax withholding under section 3401(a)), and amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Usually, this is the amount shown in box 1 of Form W-2, Wage and Tax Statement. For further information, see Pub. 15, (Circular E), Employer’s Tax Guide. Compensation also includes the salary reduction contributions made under this plan, and, if applicable, compensation deferred under a section 457 plan. In determining an employee’s compensation for prior years, the employee’s elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract are also included in the employee’s compensation.

For self-employed individuals, compensation means the net earnings from self-employment determined under section 1402(a), without regard to section 1402(c)(6), prior to subtracting any contributions made pursuant to this SIMPLE IRA plan on behalf of the individual.

Employee Notification

You must notify each eligible employee prior to the employee’s 60-day election period described above that he or she can make or change salary reduction elections and select the financial institution that will serve as the trustee, custodian, or

*This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue Bulletin, and on the IRS’s website at IRS.gov.


issuer of the employee’s SIMPLE IRA. In this notification, you must indicate whether you will provide:

1. A matching contribution equal to your employees’ salary reduction contributions up to a limit of 3% of their compensation;

2. A matching contribution equal to your employees’ salary reduction contributions subject to a percentage limit that is between 1 and 3% of their compensation; or

3. A nonelective contribution equal to 2% of your employees’ compensation.

You can use the Model Notification to Eligible Employees earlier to satisfy these employee notification requirements for this SIMPLE IRA plan. A Summary Description must also be provided to eligible employees at this time. This summary description requirement may be satisfied by providing a completed copy of pages 1 and 2 of Form 5304-SIMPLE (including the information described in Article VI—Procedures for Withdrawals).

If you fail to provide the employee notification (including the summary description) described above, you will be liable for a penalty of $50 per day until the notification is provided. If you can show that the failure was due to reasonable cause, the penalty will not be imposed.

If the financial institution’s name, address, or withdrawal procedures are not available at the time the employee must be given the summary description, you must provide the summary description without this information. In that case, you will have reasonable cause for not including this information in the summary description, but only if you ensure that it is provided to the employee as soon as administratively feasible.

Reporting Requirements

You are not required to file any annual information returns for your SIMPLE IRA plan, such as Form 5500, Annual Return/Report of Employee Benefit Plan, or Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan. However, you must report to the IRS which eligible employees are active participants in the SIMPLE IRA plan and the amount of your employees’ salary reduction contributions to the SIMPLE IRA plan on Form W-2. These contributions are subject to social security, Medicare, railroad retirement, and federal unemployment tax.

Deducting Contributions

Contributions to this SIMPLE IRA plan are deductible in your tax year containing the end of the calendar year for which the contributions are made.

Contributions will be treated as made for a particular tax year if they are made for that year and are made by the due date (including extensions) of your income tax return for that year.

Summary Description

Each year the SIMPLE IRA plan is in effect, the financial institution for the SIMPLE IRA of each eligible employee must provide the employer the information described in section 408(l)(2)(B). This requirement may be satisfied by providing the employer a current copy of Form 5304-SIMPLE (including instructions) together with the financial institution’s procedures for withdrawals from SIMPLE IRAs established at that financial institution, including the financial institution’s name and address. The summary description must be received by the employer in sufficient time to comply with the Employee Notification requirements earlier.

There is a penalty of $50 per day imposed on the financial institution for each failure to provide the summary description described above. However, if the failure was due to reasonable cause, the penalty will not be imposed.

Paperwork Reduction Act Notice. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping . . . . 3 hr., 38 min.Learning about the law or the form . . . . 2 hr., 26 min.Preparing the form . . . . 47 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Internal Revenue Service, Tax Products Coordinating Committee, SE:W:CAR:MP:T:M:S, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send this form to this address. Instead, keep it with your records.

Form 5305-SIMPLE (Rev. March 2012)

Department of the Treasury Internal Revenue Service

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)—

for Use With a Designated Financial Institution

OMB No. 1545-1502

Do not file with the Internal Revenue Service

Name of Employer

establishes the following SIMPLE

IRA plan under section 408(p) of the Internal Revenue Code and pursuant to the instructions contained in this form.

Article I—Employee Eligibility Requirements (complete applicable box(es) and blanks—see instructions) 1 General Eligibility Requirements. The Employer agrees to permit salary reduction contributions to be made in each calendar year to the

SIMPLE individual retirement account or annuity established at the designated financial institution (SIMPLE IRA) for each employee who meets the following requirements (select either 1a or 1b):

a Full Eligibility. All employees are eligible.

b Limited Eligibility. Eligibility is limited to employees who are described in both (i) and (ii) below:

(i) Current compensation. Employees who are reasonably expected to receive at least in compensation (not to exceed $5,000) for calendar year.

$

(ii) Prior compensation. Employees who have received at least in compensation (not to exceed $5,000) during any calendar year(s) (insert 0, 1, or 2) preceding the calendar year.

$

2 Excludable Employees

The Employer elects to exclude employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining. Note: This box is deemed checked if the Employer maintains a qualified plan covering only such employees.

Article II—Salary Reduction Agreements (complete the box and blank, if applicable—see instructions) 1 Salary Reduction Election. An eligible employee may make an election to have his or her compensation for each pay period reduced. The total

amount of the reduction in the employee’s compensation for a calendar year cannot exceed the applicable amount for that year. See instructions.

2 Timing of Salary Reduction Elections

a For a calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible or the day before.

b In addition to the election periods in 2a, eligible employees may make salary reduction elections or modify prior elections

. If the Employer chooses

this option, insert a period or periods (e.g., semi-annually, quarterly, monthly, or daily) that will apply uniformly to all eligible employees.

c No salary reduction election may apply to compensation that an employee received, or had a right to immediately receive, before execution of the salary reduction election.

d An employee may terminate a salary reduction election at any time during the calendar year. If this box is checked, an employee who

terminates a salary reduction election not in accordance with 2b may not resume salary reduction contributions during the calendar year.

Article III—Contributions (complete the blank, if applicable—see instructions) 1 Salary Reduction Contributions. The amount by which the employee agrees to reduce his or her compensation will be contributed by the

Employer to the employee’s SIMPLE IRA.

2 a Matching Contributions

(i) For each calendar year, the Employer will contribute a matching contribution to each eligible employee’s SIMPLE IRA equal to the employee’s salary reduction contributions up to a limit of 3% of the employee’s compensation for the calendar year.

(ii) The Employer may reduce the 3% limit for the calendar year in (i) only if:

(1) The limit is not reduced below 1%; (2) The limit is not reduced for more than 2 calendar years during the 5-year period ending with the calendar year the reduction is effective; and (3) Each employee is notified of the reduced limit within a reasonable period of time before the employees’ 60-day election period for the calendar year (described in Article II, item 2a).

b Nonelective Contributions

(i) For any calendar year, instead of making matching contributions, the Employer may make nonelective contributions equal to 2% of

compensation for the calendar year to the SIMPLE IRA of each eligible employee who has at least (not more than

$5,000) in compensation for the calendar year. No more than $250,000* in compensation can be taken into account in determining the

nonelective contribution for each eligible employee.

$

(ii) For any calendar year, the Employer may make 2% nonelective contributions instead of matching contributions only if:

(1) Each eligible employee is notified that a 2% nonelective contribution will be made instead of a matching contribution; and (2) This notification is provided within a reasonable period of time before the employees’ 60-day election period for the calendar year

(described in Article II, item 2a).

3 Time and Manner of Contributions

a The Employer will make the salary reduction contributions (described in 1 above) to the designated financial institution for the IRAs established under this SIMPLE IRA plan no later than 30 days after the end of the month in which the money is withheld from the employee’s pay. See instructions.

b The Employer will make the matching or nonelective contributions (described in 2a and 2b above) to the designated financial institution for the IRAs established under this SIMPLE IRA plan no later than the due date for filing the Employer’s tax return, including extensions, for the taxable year that includes the last day of the calendar year for which the contributions are made.

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue Bulletin, and on the IRS’s internet website at IRS.gov.

For Paperwork Reduction Act Notice, see instructions. Cat. No. 23063F Form 5305-SIMPLE (Rev. 3-2012)


Article IV—Other Requirements and Provisions

1 Contributions in General. The Employer will make no contributions to the SIMPLE IRAs other than salary reduction contributions (described in Article III, item 1) and matching or nonelective contributions (described in Article III, items 2a and 2b).

2 Vesting Requirements. All contributions made under this SIMPLE IRA plan are fully vested and nonforfeitable.

3 No Withdrawal Restrictions. The Employer may not require the employee to retain any portion of the contributions in his or her SIMPLE IRA or otherwise impose any withdrawal restrictions.

4 No Cost Or Penalty For Transfers. The Employer will not impose any cost or penalty on a participant for the transfer of the participant’s SIMPLE IRA balance to another IRA.

5 Amendments To This SIMPLE IRA Plan. This SIMPLE IRA plan may not be amended except to modify the entries inserted in the blanks or boxes provided in Articles I, II, III, VI, and VII.

6 Effects Of Withdrawals and Rollovers

a An amount withdrawn from the SIMPLE IRA is generally includible in gross income. However, a SIMPLE IRA balance may be rolled over or transferred on a tax-free basis to another IRA designed solely to hold funds under a SIMPLE IRA plan. In addition, an individual may roll over or transfer his or her SIMPLE IRA balance to any IRA or eligible retirement plan after a 2-year period has expired since the individual first participated in any SIMPLE IRA plan of the Employer. Any rollover or transfer must comply with the requirements of section 408.

b If an individual withdraws an amount from a SIMPLE IRA during the 2-year period beginning when the individual first participated in any SIMPLE IRA plan of the Employer and the amount is subject to the additional tax on early distributions under section 72(t), this additional tax is increased from 10% to 25%.

Article V—Definitions

1 Compensation

a General Definition of Compensation. Compensation means the sum of wages, tips, and other compensation from the Employer subject to federal income tax withholding (as described in section 6051(a)(3)), the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority, and the employee’s salary reduction contributions made under this plan, and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the Employer on Form W-2 (as described in section 6051(a)(8)).

b Compensation for Self-Employed Individuals. For self-employed individuals, compensation means the net earnings from self-employment determined under section 1402(a), without regard to section 1402(c)(6), prior to subtracting any contributions made pursuant to this plan on behalf of the individual.

2 Employee. Employee means a common-law employee of the Employer. The term employee also includes a self-employed individual and a leased employee described in section 414(n) but does not include a nonresident alien who received no earned income from the Employer that constitutes income from sources within the United States.

3 Eligible Employee. An eligible employee means an employee who satisfies the conditions in Article I, item 1 and is not excluded under Article I, item 2.

4 Designated Financial Institution. A designated financial institution is a trustee, custodian, or insurance company (that issues annuity contracts) for the SIMPLE IRA plan that receives all contributions made pursuant to the SIMPLE IRA plan and deposits those contributions to the SIMPLE IRA of each eligible employee.

Article VI—Procedures for Withdrawals and Transfers (The designated financial institution will provide the instructions (to be attached or inserted in the space below) on the procedures for withdrawals of contributions by employees.)

Article VII—Effective Date

This SIMPLE IRA plan is effective . See instructions.

* * * * *

Name of Employer

Address of Employer

By: Signature Date

Name and title

The undersigned agrees to serve as designated financial institution, receiving all contributions made pursuant to this SIMPLE IRA plan and depositing those contributions to the SIMPLE IRA of each eligible employee as soon as practicable. Upon the request of any participant, the undersigned also agrees to transfer the participant’s balance in a SIMPLE IRA established under this SIMPLE IRA plan to another IRA without cost or penalty to the participant.

Name of designated financial institution

Address

By: Signature Date

Name and title



Model Notification to Eligible Employees

I. Opportunity to Participate in the SIMPLE IRA Plan

You are eligible to make salary reduction contributions to the SIMPLE IRA plan. This notice and the attached summary description provide you with information that you should consider before you decide whether to start, continue, or change your salary reduction agreement.

II. Employer Contribution Election

For the calendar year, the Employer elects to contribute to your SIMPLE IRA (employer must select either (1), (2), or (3)):

(1) A matching contribution equal to your salary reduction contributions up to a limit of 3% of your compensation for the year;

(2) A matching contribution equal to your salary reduction contributions up to a limit of (employer must insert a number from 1 to 3 and is subject to certain restrictions) of your compensation for the year; or

%

(3) A nonelective contribution equal to 2% of your compensation for the year (limited to compensation of $250,000*) if you are an employee who makes at least (employer must insert an amount that is $5,000 or less) in compensation for the year.

$

III. Administrative Procedures

To start or change your salary reduction contributions, you must complete the salary reduction agreement and return it to (employer should designate a place or individual) by (employer should insert a date that is not less than 60 days after notice is given).

Model Salary Reduction Agreement I. Salary Reduction Election

Subject to the requirements of the SIMPLE IRA plan of (name of employer) I authorize or (which equals of my current rate of pay) to be withheld from my pay for each pay period and contributed to my SIMPLE IRA as a salary reduction contribution.

% $ %

II. Maximum Salary Reduction

I understand that the total amount of my salary reduction contributions in any calendar year cannot exceed the applicable amount for that year. See instructions.

III. Date Salary Reduction Begins

I understand that my salary reduction contributions will start as soon as permitted under the SIMPLE IRA plan and as soon as administratively feasible or, if later, (Fill in the date you want the salary reduction contributions to begin. The date must be after you sign this agreement.)

.

IV. Duration of Election

This salary reduction agreement replaces any earlier agreement and will remain in effect as long as I remain an eligible employee under the SIMPLE IRA plan or until I provide my Employer with a request to end my salary reduction contributions or provide a new salary reduction agreement as permitted under this SIMPLE IRA plan.

Signature of employee Date

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue Bulletin, and on the IRS website at IRS.gov.



General Instructions Section references are to the Internal Revenue Code unless otherwise noted.

Purpose of Form

Form 5305-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document that an employer may use in combination with SIMPLE IRAs to establish a SIMPLE IRA plan described in section 408(p).

These instructions are designed to assist in the establishment and administration of the SIMPLE IRA plan. They are not intended to supersede any provision in the SIMPLE IRA plan.

Do not file Form 5305-SIMPLE with the IRS. Instead, keep it with your records.

For more information, see Pub. 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), and Pub. 590, Individual Retirement Arrangements (IRAs).

Note. If you used the March 2002, August 2005, or September 2008 version of Form 5305-SIMPLE to establish a model Savings Incentive Match Plan, you are not required to use this version of the form.

Instructions for the Employer

Which Employers May Establish and Maintain a SIMPLE IRA Plan?

To establish and maintain a SIMPLE IRA plan, you must meet both of the following requirements:

1. Last calendar year, you had no more than 100 employees (including self-employed individuals) who earned $5,000 or more in compensation from you during the year. If you have a SIMPLE IRA plan but later exceed this 100-employee limit, you will be treated as meeting the limit for the 2 years following the calendar year in which you last satisfied the limit.

2. You do not maintain during any part of the calendar year another qualified plan with respect to which contributions are made, or benefits are accrued, for service in the calendar year. For this purpose, a qualified plan (defined in section 219(g)(5)) includes a qualified pension plan, a profit-sharing plan, a stock bonus plan, a qualified annuity plan, a tax-sheltered annuity plan, and a simplified employee pension (SEP) plan. A qualified plan that only covers employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining is disregarded if

these employees are excluded from participating in the SIMPLE IRA plan.

If the failure to continue to satisfy the 100-employee limit or the one-plan rule described in 1 or 2 above is due to an acquisition or similar transaction involving your business, special rules apply. Consult your tax advisor to find out if you can still maintain the plan after the transaction.

Certain related employers (trades or businesses under common control) must be treated as a single employer for purposes of the SIMPLE requirements. These are:

(1) a controlled group of corporations under section 414(b);

(2) a partnership or sole proprietorship under common control under section 414(c); or

(3) an affiliated service group under section 414(m). In addition, if you have leased employees required to be treated as your own employees under the rules of section 414(n), then you must count all such leased employees for the requirements listed above.

What Is a SIMPLE IRA Plan?

A SIMPLE IRA plan is a written arrangement that provides you and your employees with an easy way to make contributions to provide retirement income for your employees. Under a SIMPLE IRA plan, employees may choose whether to make salary reduction contributions to the SIMPLE IRA plan rather than receiving these amounts as part of their regular compensation. In addition, you will contribute matching or nonelective contributions on behalf of eligible employees (see Employee Eligibility Requirements below and Contributions later). All contributions under this plan will be deposited into a SIMPLE individual retirement account or annuity established for each eligible employee with the designated financial institution named in Article VII.

When To Use Form 5305-SIMPLE

A SIMPLE IRA plan may be established by using this Model Form or any other document that satisfies the statutory requirements.

Do not use Form 5305-SIMPLE if:

1. You want to permit each of your eligible employees to choose a financial institution that will initially receive contributions. Instead, use Form 5304-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)—Not for Use With a Designated Financial Institution;

2. You want employees who are nonresident aliens receiving no earned

income from you that is income from sources within the United States to be eligible under this plan; or

3. You want to establish a SIMPLE 401(k) plan.


Pages 1 and 2 of Form 5305-SIMPLE contain the operative provisions of your SIMPLE IRA plan. This SIMPLE IRA plan is considered adopted when you have completed all appropriate boxes and blanks and it has been executed by you and the designated financial institution.

The SIMPLE IRA plan is a legal document with important tax consequences for you and your employees. You may want to consult with your attorney or tax advisor before adopting this plan.

Employee Eligibility Requirements (Article I)

Each year for which this SIMPLE IRA plan is effective, you must permit salary reduction contributions to be made by all of your employees who are reasonably expected to receive at least $5,000 in compensation from you during the year, and who received at least $5,000 in compensation from you in any 2 preceding years. However, you can expand the group of employees who are eligible to participate in the SIMPLE IRA plan by completing the options provided in Article I, items 1a and 1b. To choose full eligibility, check the box in Article I, item 1a. Alternatively, to choose limited eligibility, check the box in Article I, item 1b, and then insert “$5,000” or a lower compensation amount (including zero) and “2” or a lower number of years of service in the blanks in (i) and (ii) of Article I, item 1b.

In addition, you can exclude from participation those employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining. You may do this by checking the box in Article I, item 2. Under certain circumstances, these employees must be excluded. See Which Employers May Establish and Maintain a SIMPLE IRA Plan? earlier.

Salary Reduction Agreements (Article II)

As indicated in Article II, item 1, a salary reduction agreement permits an eligible employee to make an election to have his or her compensation for each pay period reduced by a percentage (expressed as a percentage or dollar amount). The total amount of the reduction in the employee’s compensation cannot exceed the


applicable amount for any calendar year. The applicable amount is $11,500 for 2012. After 2012, the $11,500 amount may be increased for cost-of-living adjustments. In the case of an eligible employee who is 50 or older by the end of the calendar year, the above limitation is increased by $2,500 for 2012. After 2012, the $2,500 amount may be increased for cost-of-living adjustments.

Timing of Salary Reduction

Elections

For a calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible or the day before.

You can extend the 60-day election periods to provide additional opportunities for eligible employees to make or modify salary reduction elections using the blank in Article II, item 2b. For example, you can provide that eligible employees may make new salary reduction elections or modify prior elections for any calendar quarter during the 30 days before that quarter.

You may use the Model Salary Reduction Agreement on page 3 to enable eligible employees to make or modify salary reduction elections.

Employees must be permitted to terminate their salary reduction elections at any time. They may resume salary reduction contributions for the year if permitted under Article II, item 2b. However, by checking the box in Article II, item 2d, you may prohibit an employee who terminates a salary reduction election outside the normal election cycle from resuming salary reduction contributions during the remainder of the calendar year.

Contributions (Article III)

Only contributions described below may be made to this SIMPLE IRA plan. No additional contributions may be made.

Salary Reduction Contributions

As indicated in Article III, item 1, salary reduction contributions consist of the amount by which the employee agrees to reduce his or her compensation. You must contribute the salary reduction contributions to the designated financial institution for the employee’s SIMPLE IRA.

Matching Contributions

In general, you must contribute a matching contribution to each eligible employee’s SIMPLE IRA equal to the employee’s salary reduction contributions. This matching contribution cannot exceed 3% of the employee’s compensation. See Definition of Compensation later.

You may reduce this 3% limit to a lower percentage, but not lower than 1%. You cannot lower the 3% limit for more than 2 calendar years out of the 5-year period ending with the calendar year the reduction is effective.

Note. If any year in the 5-year period described above is a year before you first established any SIMPLE IRA plan, you will be treated as making a 3% matching contribution for that year for purposes of determining when you may reduce the employer matching contribution.

To elect this option, you must notify the employees of the reduced limit within a reasonable period of time before the applicable 60-day election periods for the year. See Timing of Salary Reduction Elections earlier.

Nonelective Contributions

Instead of making a matching contribution, you may, for any year, make a nonelective contribution equal to 2% of compensation for each eligible employee who has at least $5,000 in compensation for the year. Nonelective contributions may not be based on more than $250,000* of compensation.

To elect to make nonelective contributions, you must notify employees within a reasonable period of time before the applicable 60-day election periods for such year. See Timing of Salary Reduction Elections earlier.

Note. Insert “$5,000” in Article III, item 2b(i) to impose the $5,000 compensation requirement. You may expand the group of employees who are eligible for nonelective contributions by inserting a compensation amount lower than $5,000.

Effective Date (Article VII)

Insert in Article VII the date you want the provisions of the SIMPLE IRA plan to become effective. You must insert January 1 of the applicable year unless this is the first year for which you are adopting any SIMPLE IRA plan. If this is the first year for which you are adopting a SIMPLE IRA plan, you may insert any date between January 1 and October 1, inclusive of the applicable year.

Additional Information

Timing of Salary Reduction Contributions

The employer must make the salary reduction contributions to the designated financial institution for the SIMPLE IRAs of all eligible employees no later than the 30th day of the month following the month in which the amounts would otherwise have been payable to the employee in cash.

The Department of Labor has indicated that most SIMPLE IRA plans are also subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Under Department of Labor regulations, at 29 CFR 2510.3-102, salary reduction contributions must be made to the SIMPLE IRA at the designated financial institution as of the earliest date on which those contributions can reasonably be segregated from the employer’s general assets, but in no event later than the 30-day deadline described previously.

Definition of Compensation

“Compensation” means the amount described in section 6051(a)(3) (wages, tips, and other compensation from the employer subject to federal income tax withholding under section 3401(a)), and amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Usually, this is the amount shown in box 1 of Form W-2, Wage and Tax Statement. For further information, see Pub. 15, Circular E, Employer’s Tax Guide. Compensation also includes the salary reduction contributions made under this plan, and, if applicable, compensation deferred under a section 457 plan. In determining an employee’s compensation for prior years, the employee’s elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract are also included in the employee’s compensation.

For self-employed individuals, compensation means the net earnings from self-employment determined under section 1402(a), without regard to section 1402(c)(6), prior to subtracting any contributions made pursuant to this SIMPLE IRA plan on behalf of the individual.

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue Bulletin, and on the IRS’s website at IRS.gov.


Employee Notification

You must notify eligible employees prior to the employees’ 60-day election period described previously that they can make or change salary reduction elections. In this notification, you must indicate whether you will provide:

1. A matching contribution equal toyour employees’ salary reduction contributions up to a limit of 3% of their compensation;

2. A matching contribution equal toyour employees’ salary reduction contributions subject to a percentage limit that is between 1 and 3% of their compensation; or

3. A nonelective contribution equal to2% of your employees’ compensation.

You can use the Model Notification to Eligible Employees to satisfy these employee notification requirements for this SIMPLE IRA plan. A Summary Description must also be provided to eligible employees at this time. This summary description requirement may be satisfied by providing a completed copy of pages 1 and 2 of Form 5305-SIMPLE (including the Article VI Procedures for Withdrawals and Transfers from the SIMPLE IRAs established under this SIMPLE IRA plan).

If you fail to provide the employee notification (including the summary description) described above, you will be liable for a penalty of $50 per day until the notification is provided. If you can show that the failure was due to reasonable cause, the penalty will not be imposed.

Reporting Requirements

You are not required to file any annual information returns for your SIMPLE IRA plan, such as Form 5500, Annual Return/Report of Employee Benefit Plan or Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan. However, you must report to the IRS which eligible employees are active participants in the SIMPLE IRA plan and the amount of your employees’ salary reduction contributions to the SIMPLE IRA plan on Form W-2. These contributions are subject to social security, Medicare, railroad retirement, and federal unemployment tax.

Deducting Contributions

Contributions to this SIMPLE IRA plan are deductible in your tax year containing the end of the calendar year for which the contributions are made.

Contributions will be treated as made for a particular tax year if they are made for that year and are made by the due date (including extensions) of your income tax return for that year.

Choosing the Designated Financial Institution

As indicated in Article V, item 4, a designated financial institution is a trustee, custodian, or insurance company (that issues annuity contracts) for the SIMPLE IRA plan that would receive all contributions made pursuant to the SIMPLE IRA plan and deposit the contributions to the SIMPLE IRA of each eligible employee.

Only certain financial institutions, such as banks, savings and loan associations, insured credit unions, insurance companies (that issue annuity contracts), or IRS-approved nonbank trustees may serve as a designated financial institution under a SIMPLE IRA plan.

You are not required to choose a designated financial institution for your SIMPLE IRA plan. However, if you do not want to choose a designated financial institution, you cannot use this form (see When To Use Form 5305-SIMPLE earlier).

Instructions for the Designated Financial Institution


By completing Article VII, you have agreed to be the designated financial institution for this SIMPLE IRA plan. You agree to maintain IRAs on behalf of all individuals receiving contributions under the plan and to receive all contributions made pursuant to this plan and to deposit those contributions to the SIMPLE IRAs of each eligible employee as soon as practicable. You also agree that upon the request of a participant, you will transfer the participant’s balance in a SIMPLE IRA to another IRA without cost or penalty to the participant.

Summary Description

Each year the SIMPLE IRA plan is in effect, you must provide the employer the information described in section 408(l)(2)(B). This requirement may be satisfied by providing the employer a current copy of Form 5305-SIMPLE (including instructions) together with your

procedures for withdrawals and transfers from the SIMPLE IRAs established under this SIMPLE IRA plan. The summary description must be received by the employer in sufficient time to comply with the Employee Notification requirements on this page.

If you fail to provide the summary description described above, you will be liable for a penalty of $50 per day until the notification is provided. If you can show that the failure was due to reasonable cause, the penalty will not be imposed.

Paperwork Reduction Act Notice. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete this form will vary depending on individual circumstances. The estimated average time is:

Recordkeeping . . . . 3 hr., 38 min.

Learning about the law or the form . . . . 2 hr., 26 min.

Preparing the form . . . . 47 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Internal Revenue Service, Tax Products Coordinating Committee, SE:W:CAR:MP:T:M:S, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send this form to this address. Instead, keep it for your records.

APPLICATIONS MUST BE PRECEDED OR ACCOMPANIED BY A TIMOTHY PLAN PROSPECTUS.The prospectus containing more complete information on any of the Timothy Plan® mutual funds or portfolios, including sales charges and expenses, may be obtained from your financial adviser, from the Timo-thy Plan Sales Desk, 800-846-7526 or by downloading it from our web site at www.timothyplan.com. Please read it carefully before investing. The Timothy Plan® is distributed by Timothy Partners, Ltd. Member FINRA.

HEADQUARTERS

1055 Maitland Center CommonsMaitland, FL 32751

[email protected]

SHAREHOLDER SERVICES

The Timothy Planc/o Ultimus Fund Solutions Post Office Box 541150 Omaha, NE 68154

800.662.0201

Documents

A Retirement Plan for Individuals · oCheck (Please make check payable to the Timothy Plan.) oBank Wire (For instructions, please contact the Transfer Agent toll free at 1-800-662-0201.)