Morgan Stanley SIMPLE IRA Plan

Effective as of October 1, 2012
Morgan Stanley Smith Barney LLC (“Morgan Stanley”) hereby establishes the Morgan Stanley SIMPLE IRA for the purpose of establishing and maintaining SIMPLE retirement accounts described in Section 408(p) of the Internal Revenue Code of 1986, as amended (the “SIMPLE IRAs”). The SIMPLE IRA consists of the SIMPLE IRA document, and the separate Morgan Stanley Adoption Agreement and Morgan Stanley Client Agreement (which may be a separate Client Agreement or a component of a master brokerage account agreement) each of which has been executed by (or on behalf of) of the individual for whom the SIMPLE IRA is established (the “Participant”). Morgan Stanley maintains all such SIMPLE IRAs for the exclusive benefit of the individuals for whom such SIMPLE IRAs have been established or their beneficiaries. If this is an inherited IRA within the meaning of Code Section 408(d)(3)(C) maintained for the benefit of a designated beneficiary of a deceased Participant, references in this document to the “Participant” are to the deceased Participant, unless otherwise provided. Morgan Stanley Smith Barney LLC or an affiliate of Morgan Stanley Smith Barney LLC will act as Custodian of all SIMPLE IRAs established hereunder. This SIMPLE IRA document is effective as of October 1, 2012 for all Morgan Stanley SIMPLE IRAs regardless of the date the SIMPLE IRA was first established.

Article I — Definitions

1.1 "Adoption Agreement" shall mean the agreement signed by each individual or an individual’s Employer establishing a SIMPLE IRA for such individual. 

1.2 "Beneficiary" shall mean the person or persons designated by a Participant or the Participant’s surviving spouse, if appropriate, to receive any undistributed amount credited to the Participant’s SIMPLE IRA at the time of the Participant’s death. The Participant may designate one or more Beneficiaries at any time and from time to time including one or more contingent Beneficiaries who shall receive an interest in the SIMPLE IRA in the manner elected by the Participant only if one or more other Beneficiaries predecease the Participant, disclaim their interest in the SIMPLE IRA or are otherwise disqualified from receiving an interest in the SIMPLE IRA. The general requirements for Beneficiaries under this SIMPLE IRA document are set forth below:

(a) Non-Person Beneficiaries: A trust, estate, charitable organization or other entity that is not an individual may be designated as a Beneficiary.

(b) Form of Beneficiary Designation/ “Default Beneficiaries”: No designation of Beneficiary shall be effective until received by the Custodian, in writing, in a form acceptable to the Custodian. The Custodian shall act upon the last dated and signed designation of Beneficiary actually received by the Custodian in an acceptable form during the lifetime of the Participant. In the event no designated Beneficiary survives the Participant, or if the designated Beneficiary cannot be found, or if the Participant fails to designate a Beneficiary in writing in a form acceptable to the Custodian prior to the Participant’s death, the Custodian shall pay death benefits under the SIMPLE IRA in accordance with the following default rules:

(i) to the surviving spouse of the Participant, if any;

(ii) if no surviving spouse, then to the Participant’s surviving children (naturally born or legally adopted) in equal shares;

(iii) if no surviving spouse and if no children survive the Participant, then to the Participant’s surviving parents in equal shares, or 100% to the surviving parent;

(iv) if no surviving spouse, no surviving children and if no surviving parents of the Participant, then to the personal representative of the Participant’s estate, on behalf of the estate.

(c) Beneficiary Disclaimers: A Beneficiary, whether designated by the Participant or designated by operation of this Section 1.2, may disclaim all or part of the Beneficiary’s interest in the SIMPLE IRA by giving written notice of such disclaimer that satisfies the requirements of Section 4.4(d)(ii) to the Custodian. If the Custodian receives such a disclaimer, the SIMPLE IRA shall be distributed as if the disclaiming Beneficiary had predeceased the Participant.

(d) Subsequent Designation of Remainder Beneficiary: The Beneficiary designated hereunder may, following the death of the Participant, establish an Inherited IRA and name an individual, trust, estate or other entity to receive any minimum required distributions under Sections 4.3 or 4.4 which are scheduled to be paid after the Beneficiary’s death. Upon the death of the original Beneficiary, such individual, trust, estate or other entity shall be the Beneficiary for all purposes except for the provisions of (i) Sections 4.3 and 4.4 relating to minimum required distributions, and (ii) Section 1.2 relating to default beneficiary designations (the limitations of which is described in more detail in Section 1.2 (g) below.

(e) Community Property State Beneficiary Designations: A Participant residing in a community property state who wishes to designate a Beneficiary other than the Participant’s spouse must obtain the written consent of the spouse to the designation. Such consent shall be intended to transmute and voluntarily relinquish the spouse’s community property interest in the Participant’s SIMPLE IRA. In the event that the Participant’s spouse’s consent is not obtained as of the time of the Participant’s death, and the spouse asserts a claim to such Participant’s SIMPLE IRA, such Beneficiary designation will not be considered by the Custodian to have been received in an acceptable form, but only to the extent of such spouse’s community property interest (as demonstrated to the Custodian by such surviving spouse either through a legal opinion or valid court order) and all other elections made on such form will apply. In the absence of any conclusive determination presented by the beneficiaries with respect to these matters, the Custodian may take such further action including, but not limited to actions described in Sections 6.5 and 6.8.

(f) Effect of Divorce on Beneficiary Designation: If the Participant has designated his or her spouse as a Beneficiary, then, effective immediately upon the divorce, annulment or other lawful dissolution of their marriage, the designation of the ex-spouse as Beneficiary shall be null and void. The SIMPLE IRA will, upon the death of the Participant, be distributed as if the ex-spouse had predeceased the Participant. If the Participant, whether voluntarily or pursuant to a court order or agreement, determines to retain the ex-spouse as a Beneficiary, the Participant must submit a new designation of Beneficiary, in an acceptable form, dated after the date of the divorce, annulment or other lawful dissolution of the marriage, except to the extent a court order might otherwise provide.

(g) Application of Default Beneficiary Provisions— Special Circumstances: If the sole Beneficiary of a SIMPLE IRA (including a SIMPLE IRA that has been created by dividing a decedent’s SIMPLE IRA into separate SIMPLE IRAs following the death of the Participant) fails to designate a beneficiary or, if applicable, a remainder beneficiary, or the Beneficiary cannot be found, the default provisions provided in Section 1.2(b) will apply for the purposes of determining who is entitled to receive the SIMPLE IRA (with the term “Beneficiary” replacing the term “Participant” in Section 1.2 (b)(i)-(iv). In the event a remainder beneficiary that is a natural person as described in Section 1.2(d) above dies after receiving benefits, amounts will be payable to his/her Estate in a lump sum payment.

(h) Powers of Appointment: When the Participant is alive, no Beneficiary or representative of the Participant may act as the Participant to provide directions or instructions with respect to the Participant’s Account, except if authorized to do so in a manner acceptable to the Custodian and permitted by law.

1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended. 

1.4 "Custodian" shall mean Morgan Stanley Smith Barney LLC, a Delaware limited liability corporation, or its successor or eligible assignee, or an affiliate designated by Morgan Stanley Smith Barney LLC to act as Custodian for CESAs established or maintained under this Plan. In the event that Morgan Stanley Smith Barney LLC is merged with an unaffiliated legal entity where Morgan Stanley Smith Barney LLC is not the surviving entity, or if Morgan Stanley Smith Barney LLC is acquired, in whole or in part, by another unaffiliated legal entity who acquires the custodial CESA business of Morgan Stanley Smith Barney LLC, such entity shall become Custodian, under this document, so long as (a) the terms of such operative documents providing for the assumption of the role of CESA custodian by the acquisition or merger specify the assumption of the CESA custodianship and (b) such successor or acquiring entity satisfies the requirements under the Code and applicable Federal and state law for serving as a CESA custodian. In the event of a corporate reorganization of Morgan Stanley Smith Barney LLC and its affiliates where Morgan Stanley Smith Barney LLC is not a surviving entity, any such successor entity shall, if otherwise satisfying the requirements under the Code and applicable Federal and state law, automatically become Custodian as of the date of such reorganization. In the event that Morgan Stanley Smith Barney LLC shall merge, be acquired, or be reorganized and the foregoing provisions do not provide a successor Custodian, the participant shall appoint a successor Custodian in accordance with Section 8.2. 

1.5 "Education Savings Account" shall mean a Coverdell Education Savings Account described in Code Section 530, formerly known as an Education IRA. 

1.6 “Eligible Employee” shall mean an individual employed by an Employer (or a self-employed individual with net earned income from personal services rendered to an Employer) satisfying the eligibility requirements of such Employer’s SIMPLE IRA Plan.

1.7 “Employer” shall mean a corporation, trade or business, including but not limited to self-employed individuals, tax exempt organizations and state or local governments or government agencies.

1.8 “IRA” shall mean a Traditional IRA, SIMPLE IRA and a Roth IRA but shall not mean an Education Savings Account.

1.9 “Participant” shall mean an individual establishing a SIMPLE IRA or on whose behalf a SIMPLE IRA is established.

1.10 “Roth IRA” shall mean an individual retirement plan described in Code Section 408A.

1.11 “SIMLE IRA Plan” shall mean any SIMPLE IRA Plan that is established by an Employer under which contributions are made pursuant to a qualified salary reduction arrangement to SIMPLE retirement accounts of Eligible Employees, as described in Code Section 408(p).

1.12 “Traditional IRA” shall mean an individual retirement plan described in Code Section 408(a) or 408(b) but shall not include a SIMPLE IRA, Roth IRA or Education Savings Account.

1.13 “Year” shall mean the calendar year ending December 31 unless the context expressly refers to a fiscal or taxable year which may end on another date.

Article II — Contributions

2.1 Establishment of SIMPLE IRA. Any Eligible Employee (or the duly authorized representative of an Eligible Employee), any Employer obligated to make a contribution on behalf of an Eligible Employee, any individual wishing to make a rollover contribution described in Section 2.5, or any individual wishing to effect a transfer described in Section 5.1(a), may establish a SIMPLE IRA by delivering an executed Adoption Agreement and Client Agreement to the Custodian. A duly authorized representative includes a parent, legal guardian, conservator or other court-appointed representative of a minor child or incapacitated adult, an attorney-in-fact acting under a power of attorney, the personal representative of a decedent’s estate or the beneficiary of an individual’s interest in a SIMPLE IRA. The SIMPLE IRA shall be established when the Custodian accepts the Adoption Agreement. At that time, such Eligible Employee or individual shall become a Participant and shall be bound by all of the terms and conditions of the SIMPLE IRA as set forth in this document.

2.2 Revocation of Participation. Any person who establishes a SIMPLE IRA pursuant to Section 2.1 above, may revoke, without penalty, the SIMPLE IRA at any time within seven days after the earlier of the establishment or the purchase of the SIMPLE IRA by notifying the Custodian in writing of such revocation.

Upon revocation of a SIMPLE IRA under this Section 2.2, the Custodian shall return the full amount contributed by such person together with any fees, charges or expenses paid by such person and without regard to any change in market value of SIMPLE IRA assets.

2.3 Contributions. The SIMPLE IRA will accept:

(a) A cash contribution made by an Employer on behalf of the Participant under a SIMPLE IRA Plan that meets the requirements of Code Section 408(p); and

(b) A rollover contribution described in Section 2.5 or a transfer described in Section 5.1(a) from another SIMPLE IRA of the Participant.

(c) No other contributions will be accepted.

2.4 Source of Contributions. The SIMPLE IRA will accept contributions made pursuant to any SIMPLE IRA Plan maintained by any Employer regardless of whether the Custodian has been designated as the sole financial institution to receive such contributions or the Employer has adopted the Morgan Stanley SIMPLE IRA Plan.

2.5 Rollover Contributions. An individual receiving a distribution of all or a portion of the balance of a SIMPLE retirement account, as defined in Code Section 408(p), may make an irrevocable election to contribute all or a portion of such distribution to this SIMPLE IRA no later than 60 days after the distribution is made, provided the distribution qualifies for rollover treatment under Code Section 408(d)(3).

2.6 Nonforfeitability of Contributions. A Participant’s interest in a SIMPLE IRA shall be nonforfeitable at all times.

2.7 Nature of Contributions. Only contributions described in Sections 2.3 and 2.5, may be made to a SIMPLE IRA. Except in the case of a rollover contribution or a recharacterized contribution described in Section 2.5 above, no contributions will be accepted unless they are in cash. A rollover contribution may consist of cash and property received by the Participant in a distribution described in Section 2.5 provided that such property is of a nature and in a form acceptable to the Custodian.

Article III — Investments of Contributions

3.1 Direction by Participant. Each Participant (or the Participant’s duly authorized representative) shall direct the Custodian with respect to the investment and reinvestment of the contributions to the Participant’s SIMPLE IRA and the earnings thereon. Such direction shall include investments available for acquisition through the Custodian in its regular course of business and approved by the Custodian for investment by SIMPLE IRAs. The Custodian will not have discretionary authority or control with respect to the investment of the SIMPLE IRA assets, will not provide investment advice that will serve as a primary basis for the investment decisions of the Participant’s SIMPLE IRA, and will not be deemed a fiduciary of the SIMPLE IRA, as such term is defined under Code Section 4975(e)(3) or Section 3(21) of the Employee Retirement Income Security Act of 1974 (“ERISA”), if applicable. The Custodian is not responsible for reviewing the assets in the Participant’s SIMPLE IRA, or for making recommendations on acquiring, retaining or selling any assets. Uninvested cash, dividends and distributions on shares of mutual funds or other investments held in the SIMPLE IRA that are paid in cash will be invested along with other cash balances (see Cash Balances, below).

3.2 Delegation of Investment Responsibility. The Participant (or the Participant’s duly authorized representative) may delegate the authority to invest all or a portion of the Participant’s SIMPLE IRA to an agent or attorney-in-fact, including but not limited to a division or affiliate of the Custodian, by notifying the Custodian in writing on a form acceptable to the Custodian of the delegation of such investment authority, the name of the person or persons to whom such authority is delegated, any limitations upon such authority and the assets over which such agent or attorney-in-fact shall have investment authority. The Custodian shall follow the directions of such agent or attorney-in-fact and shall be under no duty to review or question any direction, action or failure to direct or act of such agent or attorney-in-fact. The Participant may revoke the agent’s or attorney-in-fact’s authority at any time by notifying the Custodian in writing of such revocation. The Custodian shall not be liable in any way for transactions initiated prior to receipt of such notice of revocation. The Participant (or the Participant’s duly authorized representative) is responsible at all times for directing the investment of assets in the SIMPLE IRA.

3.3 Cash Balances. The Participant authorizes the deposit or investment of cash balances in the SIMPLE IRA in:

(a) Deposit accounts with Morgan Stanley Bank, N.A. and/or any other banking affiliate of the Custodian that bear a reasonable rate of interest;

(b) Any other sweep investment vehicle specified either in the Adoption Agreement or an agreement applicable to the sweep investment vehicle for the SIMPLE IRA; or

(c) A sweep investment vehicle otherwise made available to the SIMPLE IRA and disclosed to the Participant.

The Custodian may amend this Section 3.3, or change the sweep investment vehicle available to the SIMPLE IRA, at any time with notice to the Participant.

3.4 Uninvested Cash. The Custodian may hold uninvested cash in amounts less than $1.00 in a Participant’s SIMPLE IRA.

3.5 Prohibition on Investment in Life Insurance and Collectibles. A Participant may not invest any portion of a SIMPLE IRA in life insurance contracts or in any work of art, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages or any other tangible personal property classified by the Secretary of the Treasury or the Secretary’s delegate as a collectible within the meaning of Code Section 408(m), except that SIMPLE IRA assets may be used to purchase certain coins and, effective January 1, 1998, certain bullion, described in Code Section 408(m)(3).

3.6 Morgan Stanley Managed Account / Advisory services. The Participant may enroll the SIMPLE IRA in a Morgan Stanley advisory service, as provided under a separate agreement.

Article IV — Distributions

4.1 In General. A Participant (or the Participant’s duly authorized representative) may direct a distribution of all or a portion of the Participant’s SIMPLE IRA at any time and from time to time in such form and in such manner as is acceptable to the Custodian. A distribution shall be made only upon notification to the Custodian pursuant to Section 4.5 below.

4.2 Methods of Distribution. Subject to Section 4.3, the Participant (or the Participant’s duly authorized representative) or, if the Participant is deceased, a Beneficiary, may elect to have the balance in the Participant’s SIMPLE IRA distributed in cash or in kind as follows:

(a) In a single lump sum payment;

(b) In equal or substantially equal installments at least annually over a period not extending beyond the life or life expectancy of the Participant or Beneficiary or the joint lives or joint life expectancies of the Participant and Beneficiary;

(c) By purchase of an annuity contract satisfying the requirements of Code Sections 408(b)(1), (3) and (4) and providing for equal or substantially equal payments at least annually over the life or life expectancy of the Participant or Beneficiary or the joint lives or joint life expectancies of the Participant and Beneficiary, and which meets the requirements set forth in Section 1.401(a) (9)-6 of the Income Tax Regulations including the incidental death benefit requirements of Income Tax Regulations (“Reg.”) Section 1.409(a)(9)-6 (Q&A 2(e)) or any successor;

(d) In monthly, quarterly or annual installments in such amount(s) as the Participant or Beneficiary may request; or

(e) Any combination of the above (subject to the requirements of the Code).

(f) Subject to the minimum distribution requirements set forth in Section 4.3 below, unless an annuity contract is purchased and distributions have commenced, the Participant or Beneficiary may change the method of distribution at any time before benefits are completely distributed by filing a new election with the Custodian prior to the effective date of the change in method of distribution. Notwithstanding the foregoing, a Participant may effect a distribution by converting the Participant’s SIMPLE IRA to a Roth IRA after the two-year period described in Section 5.3(a) and, for years before 2010, if the Participant meets the requirements of Code Sections 408A(c)(3)(B) and (d)(3).

4.3 Minimum Distribution Requirements. Notwithstanding any provision of this SIMPLE IRA to the contrary, the distribution of a Participant’s interest in a SIMPLE IRA shall be made in accordance with the requirements of Code Section 408(a)(6) and the regulations thereunder. If distributions are made from an annuity contract purchased from an insurance company, distributions thereunder must satisfy the requirements set forth in Section 1.401(a)(9)-6 of the Income Tax Regulations.

(a) Required Beginning Date. A Participant must take distributions from a SIMPLE IRA for each year beginning with the year in which the Participant attains age 70½, and for each succeeding year including the year of the Participant’s death. The first such required distribution must be made no later than April 1 of the year following the year in which the Participant attains age 70½ (the “required beginning date”) and, for each succeeding year, no later than December 31 of each such year. Each year for which a required distribution must be taken is referred to below as a “distribution calendar year” or “DCY.”

(b) Required Minimum Distribution. During the Participant’s lifetime, if the Participant directs the SIMPLE IRA to be distributed by any method other than a single lump sum, then the amount which must be distributed each year (“required minimum distribution”) shall be not less than the amount obtained by dividing the value of the Participant’s SIMPLE IRA as of December 31 of the year preceding the year for which such distribution is to be made by the lesser of:

(i) The distribution period in the Uniform Lifetime Table set forth in Q&A-2 of Section 1.401(A)(9)-9 of the Income Tax Regulations, using the Participant’s age as of the age of Participant’s birthday in the distribution calendar year; or

(ii) If the sole designated Beneficiary is the Participant’s surviving spouse and such spouse is more than 10 years younger than the Participant, the number in the Joint and Last Survivor Table set forth in Q&A-3 of Section 1.401(a)(9)-9 of the Income Tax Regulations, using the ages of the Participant and the Participant’s spouse as of their birthdays in the distribution calendar year.

(iii) For purposes of paragraphs (b)(i) and (b)(ii) the “value of the SIMPLE IRA” is the fair market value of the assets held in the SIMPLE IRA plus the value of any outstanding rollover, transfer or recharacterization under Q&A-7 and -8 of Section 1.408-8 of the Income Tax Regulations.

(c) In accordance with Q&A-9 of Section 1.408-8 of the Income Tax Regulations, the Participant must calculate the required mini- mum distribution separately for each Traditional and SIMPLE IRA maintained by the Participant. A Participant may direct the distribution of all or any portion of the aggregate required minimum distributions for all such accounts from any one or more Traditional or SIMPLE IRA s regardless of whether the IRAs are established with the Custodian.

(d) If this is an inherited IRA within the meaning of Code Section 408(d)(3)(C), Section 4.3 does not apply.

4.4 Death Benefits

(a) Death On or After Required Beginning Date. If a Participant dies on or after the Participant’s required beginning date but before the distribution of the Participant’s entire interest in the SIMPLE IRA, the remaining portion of such interest shall be distributed at least as rapidly as follows:

(i) If the designated Beneficiary is someone other than the Participant’s surviving spouse, the remaining interest will be distributed over the longer of: (A) the Beneficiary’s life expectancy, determined using the Beneficiary’s age as of his or her birthday in each distribution calendar year following the year of the Participant’s death; or (B) over the period described in (a)(iii) below.

(ii) If the Participant’s sole designated Beneficiary is the Par- ticipant’s surviving spouse, the remaining interest will be distributed over the longer of: (A) such spouse’s life expectancy determined using the spouse’s age as of his or her birthday in the year following the year of the Participant’s death; or (B) over the period described in paragraph (a)(iii) below. Any interest remaining after such spouse’s death will be distributed over such spouse’s remaining life expectancy determined using the spouse’s age as of his or her birthday in the year of the spouse’s death, or, if the distributions are being made over the period described in paragraph (a)(iii) below, over such period.

(iii) If there is no designated Beneficiary or, if applicable by operation of paragraph (a)(i) or (a)(ii) above, the remaining interest will be distributed over the Participant’s remaining life expectancy determined in the year of the Participant’s death.

(iv) The amount to be distributed each year under paragraph (a)(i), (ii) or (iii), beginning with the first distribution calendar Year following the calendar year of the Participant’s death, is the quotient obtained by dividing the value of the SIMPLE IRA as of the end of the preceding year by the remaining life expectancy specified in such paragraph. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole designated Beneficiary, such spouse’s remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse’s age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the Beneficiary’s or Participant’s age in the year specified in paragraph (a)(i), (ii) or (iii) and reduced by 1 for each subsequent year.

(v) Trust as Beneficiary. If the following requirements are met with respect to a trust named as Beneficiary of the SIMPLE IRA, then the trust beneficiaries (and not the trust itself) will be treated as designated Beneficiaries for purposes of determining the distribution period under Code Section 401(a)(9):

(A) The trust is valid under state law, or would be but for the fact that there is no corpus.

(B) The trust is irrevocable or will, by its terms, become irrevocable upon the death of the Participant.

(C) The beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the SIMPLE IRA are identifiable from the trust instrument within the meaning of Section 1.401(a) (9)-4, Q&A-1 of the Income Tax Regulations.

(D) The Participant or the Trustee of the trust has provided to the Custodian either:

(I) A copy of the trust instrument, and agrees that if the trust instrument is amended at any time in the future, the Participant will, within a reasonable time, provide to the Custodian a copy of each such amendment, or

(II) The following documentation:

(aa) A list of all trust beneficiaries (including contingent and remainder beneficiaries with a description of the conditions of their entitlement) for purposes of Code Section 401(a)(9).

(bb) A certification, to the best of the Participant’s knowledge, that (aa) is correct and complete, and that the requirements of (v)(A), (v)(B), and (v)(C) are satisfied.

(cc) Agreement that, if the trust instrument is amended at any time in the future, the Participant will, within a reason- able time, provide to the Custodian corrected certifications to the extent that the amendment changes any information previously certified; and agreement to provide a copy of the trust instrument to the Custodian upon demand.

(III) The documents described in (I) and (II) above may be provided by the Participant or by the Trustee of the trust at any time starting with the date on which the trust is designated as a Beneficiary, but not later than October 31 of the year following the year of the Participant’s death. However, if the sole beneficiary of the trust is the Participant’s spouse and the spouse is more than ten years younger than the Participant, the documents described in (I) and (IIII) above must be provided to the Custodian no later than the earlier of (aa) The Participant’s required beginning date or (bb) October 31 of the year following the year of the Participant’s death.

(b) Death Before Required Beginning Date. If the Participant dies before the required beginning date, his or her entire interest will be distributed at least as rapidly as follows:

(i) If the designated Beneficiary is someone other than the Participant’s surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the Participant’s death, over the remaining life expectancy of the designated beneficiary, with such life expectancy determined using the age of the beneficiary as of his or her birthday in the year following the year of the participant’s death, or, if elected, in accordance with paragraph (b)(iii) below.

(ii) If the participant’s sole designated Beneficiary is the participant’s surviving spouse, the entire interest will be distributed, starting by either: (A) the end of the calendar year following the calendar year of the participant’s death, or (B) at the election of the surviving spouse, the end of the calendar year in which the Participant would have attained age 70½, if later. Distributions will be made over such spouse’s life expectancy, or, if elected, in accordance with paragraph (b)(iii) below. If the surviving spouse dies before distributions are required to begin, the remaining interest will be distributed, starting by the end of the calendar year following the calendar year of the spouse’s death, over the spouse’s designated Beneficiary’s remaining life expectancy determined using such Beneficiary’s age as of his or her birthday in the year following the death of the spouse, or, if elected, will be distributed in accordance with paragraph (b)(iii) below. If the surviving spouse dies after distributions are required to begin, any remaining interest will be distributed over the spouse’s remaining life expectancy determined using the spouse’s age as of his or her birthday in the year of the spouse’s death.

(iii) If there is no designated Beneficiary or, if applicable by operation of paragraph (b)(i) or (b)(ii) above, the entire SIMPLE IRA will be distributed by the end of the calendar year containing the fifth anniversary of the Participant’s death (or of the spouse’s death in the case of the surviving spouse’s death before distributions are required to begin).

(iv) The amount to be distributed each year under paragraph (b)(i) or (ii) is the quotient obtained by dividing the value of the SIMPLE IRA as of the end of the preceding year by the remaining life expectancy specified in such paragraph. For this purpose, the “value of the SIMPLE IRA” is the fair market value of the assets held in the SIMPLE IRA plus the value of any outstanding rollover, transfer or recharacterization under Q&A-7 and -8 of Section 1.408-8 of the Income Tax Regulations. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole designated Beneficiary, such spouse’s remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse’s age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the Beneficiary’s age in the year in which distributions must begin under paragraph (b)(i) or (ii) above, as applicable, and reduced by 1 for each subsequent year.

(v) Trust as Beneficiary. If the requirements of Section 4.4(a)(v) above are met with respect to a trust named as beneficiary of a SIMPLE IRA, then the trust beneficiaries (and not the trust itself) will be treated as Designated Beneficiaries for purposes of determining the distribution period under Code Section 401(a)(9) of the Income Tax Regulations.

(c) Surviving Spouse’s Elections. If the sole designated Beneficiary is the individual’s surviving spouse, the spouse may elect to treat the SIMPLE IRA as his or her own SIMPLE IRA. This election will be deemed to have been made if such surviving spouse makes a contribution to the SIMPLE IRA permitted under Section 2.5, or fails to take minimum required distributions by the relevant required beginning date described in (a)(ii) or (b)(ii) above.

(d) Determination of Designated Beneficiary. Under Code Section 401(a)(9)(E) and Section 1.401(a)(9)-4 of the Income Tax Regulations, the term “Designated Beneficiary” refers to an individual or individuals designated as the Beneficiary or Beneficiaries by the Participant or by operation of this agreement, as of the Participant’s date of death, who remain Beneficiaries as of September 30 of the calendar year following the calendar year of the Participant’s date of death. Any person who was a Beneficiary as of the date of the Participant’s death, but is not a Beneficiary as of that September 30 (e.g., because the person receives the entire benefit to which the person is entitled before that September 30), is not taken into account in determining the Participant’s Designated Beneficiary for purposes of determining the distribution period for Required Minimum Distributions after the Participant’s death.

(i) Death of Beneficiary prior to September 30. If an individual who is a Beneficiary as of the date of the Participant’s death dies during the period between the Participant’s date of death and September 30 of the year following the year of the Participant’s death without having disclaimed his or her interest, that individual continues to be treated as the Designated Beneficiary for purposes of determining the distribution period.

(ii) Disclaimer by Beneficiary prior to September 30. If a Beneficiary disclaims his or her interest prior to September 30 of the year following the year of the Participant’s death, the disclaimant is not taken into account in determining the employee’s Designated Beneficiary, provided the disclaimer satisfies Code Section 2518.

(iii) Multiple Beneficiaries:

(A) General Rule. If more than one individual is designated as a Beneficiary as of the applicable date for determining the Designated Beneficiary under A-4 of 1.401(a)(9)-4, the Designated Beneficiary with the shortest life expectancy will be the designated Beneficiary for purposes of determining the applicable distribution period.

(B) Separate Accounts. If separate accounts are established with respect to the multiple Beneficiaries, each Beneficiary may determine his or her required minimum distribution based upon his or her individual life expectancy as opposed to using the life expectancy of the beneficiary whose life expectancy is shortest. Separate accounts can be established at any time, either before or after the Participant’s required beginning date. The separate accounts will be recognized for required minimum distribution purposes only after the later of the year of the Participant’s death (whether before or after the required beginning date) and the year the separate accounts are established. If separate accounts are established, the separate accounting must allocate all post-death investment gains or losses for the period prior to the establishment of the separate accounts on a pro rata basis in a reasonable and consistent basis among the separate accounts for the different beneficiaries. The separate accounting must also allocate any post-death distributions to the separate account of the beneficiary receiving such distributions.

(C) Notice to Custodian. By September 30 of the year following the calendar year of the Participant’s death, the Custodian must receive notice of the names of the Designated Beneficiaries as well as notice of any separate accounts to be established for such beneficiaries.

(D) Inherited IRAs. The required minimum distributions pay- able to a designated beneficiary from this IRA may be withdrawn from another IRA the beneficiary holds from the same decedent in accordance with Q&A-9 of Section 1.408-8 of the Income Tax Regulations.

4.5 Directions to Custodian. All directions to the Custodian for the distribution of property held in a SIMPLE IRA must be in writing on a form acceptable to the Custodian or in such other medium as shall be acceptable to the Custodian. Such directions shall include, but not be limited to, an identification of the SIMPLE IRA, the amount of cash or specific securities or other property to be distributed, the order in which securities or other property held in the SIMPLE IRA shall be liquidated, if necessary, the nature or purpose of the distribution, the party to whom the distribution shall be made, whether income taxes are to be withheld and such other representations or facts as the Custodian may reasonably require.

4.6 Effect of Distribution. The Custodian shall have no obligation to determine whether a distribution from the SIMPLE IRA is permissible under the Code or any other applicable law. The Custodian may reasonably rely on a representation by the Participant or Beneficiary that a distribution is so permitted. The Custodian may reasonably rely on directions from the Participant, Beneficiary or a duly authorized representative of either with respect to the amount and timing of minimum required distributions or with respect to a representation that the minimum required distribution for the SIMPLE IRA has been received from another IRA or SIMPLE IRA. The Custodian shall be entitled to withhold from delivery and to reserve such property as it deems reasonably necessary for the payment of all of its unpaid fees and other expenses and/or for the payment of any other liability or charge against the SIMPLE IRA. The Custodian shall not be liable for distributed SIMPLE IRA assets removed from the SIMPLE IRA at the direction of the Participant, Beneficiary, the duly authorized representative of either or a court or government agency of competent jurisdiction.

Article V — Transfers and Rollovers

5.1 In General. Cash, securities or other property may be transferred to or from a SIMPLE IRA as follows:

(a) Cash, securities or other property held on the Participant’s behalf by the custodian or trustee of another simple retirement account described in Code Section 408(p) may be transferred to the Custodian and held in a SIMPLE IRA for the benefit of the Participant but only to the extent that such cash, securities or other property meets the Custodian’s requirements with respect to the administrative feasibility of accepting such transfers. The Custodian is not obligated to accept (and may reject or refuse) any transfer.

(b) Upon the direction of the Participant, Beneficiary or duly authorized representative of either, made in writing in a form accept- able to the Custodian, or such other medium as may be acceptable to the Custodian, the Custodian shall transfer cash, securities or other property held in the Participant’s SIMPLE IRA to the trustee or custodian of a SIMPLE retirement account described in Code Section 408(p) or, if at least two years have elapsed since the Participant first participated in the Employers’ SIMPLE IRA, to a Traditional or a Roth IRA, established by or for the benefit of the Participant or Beneficiary.

(c) A Participant may, upon written direction to the Custodian accompanied by a copy of the decree or instrument described herein, transfer all or any part of the Participant’s SIMPLE IRA to a spouse or former spouse under a decree of divorce or separate maintenance or an instrument incident thereto as described in Code Section 71(b)(2)(A).

5.2 Effect of Transfer. Upon receipt of a written direction to transfer all or part of the property held in a SIMPLE IRA, the Custodian shall act upon such direction within a reasonable period of time to the extent reasonably possible. The Custodian shall be entitled to withhold and reserve such cash or property from such transfer as the Custodian deems reasonably necessary for the payment of all of its unpaid fees and other expenses and/or for the payment of any other liability or charge against the SIMPLE IRA. The Custodian shall have no obligation to ascertain whether any transfer made under this Article is permissible under the Code or any other applicable law and may reasonably rely upon any representation by the Participant or Beneficiary that the transfer does not violate the terms of the Code or any other applicable law. The Custodian shall not be liable for transferred SIMPLE IRA assets removed from the SIMPLE IRA at the direction of the Participant, Beneficiary, the duly authorized representative of either or a court or government agency of competent jurisdiction.

5.3 Rollover, Recharacterization and Reconversion of Distributions.

(a) Rollover Contributions. Prior to the expiration of the two-year period beginning on the date the individual first participated in any SIMPLE IRA Plan maintained by the individual’s employer, any rollover or transfer by the individual of funds from this SIMPLE IRA must be made to another SIMPLE IRA of the individual. Any distribution of funds to the individual during this two-year period may be subject to a 25% additional tax if the individual does not roll over the amount distributed into a SIMPLE IRA. After the expiration of this two-year period, and subject to the requirements of Code Sections 408(d)(3), 408A(6) and 408A(d)(3), the individual may roll over or transfer funds to any Traditional, Roth or SIMPLE IRA, or to another eligible retirement plan described in Code Section 402(c)(8)(B).

(b) Recharacterization of Rollover Contributions. Pursuant to the rules set forth in Income Tax Regulations §1.408A-5, a Participant (or a Participant’s executor, administrator, legal guardian or other duly authorized representative), may elect to transfer, in whole or in part, any rollover contribution made by the Participant to a SIMPLE, Traditional or Roth IRA (the “First IRA”) for a taxable year to another SIMPLE, Traditional or Roth IRA (the “Second IRA”). The Participant, for Federal income tax purposes, shall treat the transferred contribution as having been made to the Second IRA instead of the First IRA as of the same date and for the same taxable year as the contribution was made to the First IRA. The Custodian may be Custodian of either or both of the First and Second IRA. The Participant must notify the Custodian of the recharacterization and direct the transfer no later than the due date with extensions of the Participant’s Federal income tax return for the taxable year for which the contribution was made to the First IRA. The amount that may be recharacterized is the amount contributed to the First IRA, adjusted for net income or net losses either by transferring the entire First IRA or pursuant to a calculation under Income Tax Regulation §1.408-4 (c)(2)(ii). Amounts contributed to the First IRA in a tax-free transfer may not be recharacterized except for amounts erroneously rolled over or transferred from a Traditional IRA to a SIMPLE IRA. Employer contributions, including employee elective deferrals to a SIMPLE IRA, may also not be recharacterized. However, amounts rolled over or converted from a SIMPLE IRA to a Roth IRA may be recharacterized back to the SIMPLE IRA. Amounts treated as excess IRA contributions for a prior year and deemed to be current-year contributions for purposes of Code Section 4973 may not be recharacterized.

(c) Reconversions of Recharacterized Amounts. Pursuant to the rules set forth in Income Tax Regulations §1.408A-5 (Q&A9), an amount that has been rolled over or converted from a SIMPLE IRA to a Roth IRA and transferred back to a SIMPLE IRA by means of a recharacterization, may not be reconverted to a Roth IRA before the later of (i) the beginning of the next following taxable year, or (ii) 30 days after the date on which the amount was transferred back to the SIMPLE IRA by means of the recharacterization. Any amount previously converted must be adjusted for subsequent net income to determine the amount subject to this limit on subsequent reconversions. For this purpose, a conversion which fails (and is subsequently recharacterized) because the Participant’s modified adjusted gross income, as defined in Code Section 408A(c)(3)(C)(i)(“MAGI”) exceeds the $100,000 limit for years prior to 2010 is treated as a conversion for the purpose of applying this limit on reconversions.

Article VI — Power, Duties and Obligations of Custodian

6.1 No Investment Discretion. Except as otherwise agreed in writing between the Participant and the Custodian or an affiliate of the Custodian, the Custodian shall have no discretion to direct any investments of a SIMPLE IRA, and is solely authorized to acquire and hold the particular investments specified by the Participant. The Custodian is not, however, obligated to act upon each and every investment direction and may, within its normal and customary practices, decline to act upon a given investment direction. Notwithstanding any other provision herein to the contrary, the Custodian may refuse to follow instructions which it reasonably believes will result in a transaction prohibited by Code Section 4975.

6.2 Investment Powers. The Custodian may hold any securities acquired for a SIMPLE IRA in the name of the Custodian without qualification or description, in the name of any nominee or by or through a central clearing corporation or depository. The Custodian shall have the following powers and authority with respect to the administration of each SIMPLE IRA:

(a) To invest and reinvest the assets of the SIMPLE IRA without regard to whether such investment is authorized by the laws of any jurisdiction for fiduciary investments.

(b) To exercise, buy or sell covered listed options, conversion privileges or rights to subscribe for additional securities and to make payments therefore.

(c) To consent to or participate in dissolutions, reorganizations, consolidations, mergers, sales, leases, mortgages, transfers or other changes affecting securities held by the Custodian.

(d) To make, execute and deliver as Custodian any and all contracts, waivers, releases or other instruments in writing necessary or proper for the exercise of any of the foregoing powers.

(e) To grant options to purchase securities held by the Custodian or to repurchase options previously granted with respect to securities held by the Custodian.

(f) The Custodian shall exercise any rights of a shareholder (including voting rights) with respect to any securities held in the SIMPLE IRA only in accordance with the instructions of the Participant, pursuant to any applicable rules of the Securities and Exchange Commission and the national securities exchanges of which the Custodian is a member.

(g) To invest and reinvest the assets of the SIMPLE IRA in deposits of an affiliate or affiliates which bear a reasonable rate of interest.

6.3 Administrative Powers.

(a) The Custodian shall have the power to take such actions as are reasonable and necessary to carry out its duties hereunder.

(b) The Custodian shall be under no duty to take any action other than as specified herein unless the Participant or Beneficiary furnishes the Custodian with written instructions, agrees to indemnify and hold the Custodian harmless from any claims arising out of such instructions and such instructions are specifically agreed to in writing by an authorized representative of the Custodian.

(c) The Custodian may consult with and employ suitable agents and advisors, including but not limited to legal counsel, accountants and tax advisors, with respect to its duties under the SIMPLE IRA and applicable law.

(d) The Custodian may mail notices to the Participant or Beneficiary to the last known address of the Participant or Beneficiary.

(e) The Custodian shall keep such records and shall file with the appropriate government agencies, including but not limited to the Internal Revenue Service, such reports, returns and other information concerning the SIMPLE IRA as may be required of it by law or regulation. The Custodian may pay such taxes as are owed by the SIMPLE IRA as an expense of the SIMPLE IRA.

(f) The Custodian may liquidate assets held in a SIMPLE IRA to make distributions or transfers or pay fees, expenses, liabilities, charges or taxes assessed against the SIMPLE IRA. If the Custodian must liquidate assets and the Participant fails to instruct the Custodian as to the liquidation of such assets, assets will be liquidated in the following order to the extent held in the SIMPLE IRA:

(i) Shares held in the Morgan Stanley Liquid Asset Fund, Inc. sweep vehicle or other money market mutual fund sweep vehicle or assets held in savings accounts.

(ii) Amounts held in the Bank Deposit Program sweep vehicle or any other sweep vehicle specified pursuant to Section 3.3.

(iii) Shares held in a money market mutual fund acquired through direct purchase.

(iv) Publicly traded securities in such order as the Custodian deems reasonable.

(v) Other investments in such order as the Custodian deems reasonable.

(vi) Limited Partnership interests.

6.4 Records and Reports.

(a) The Custodian shall keep accurate records of all contributions, receipts, investments, distributions, disbursements and other transactions of the SIMPLE IRA.

(b) Periodically, but not less than once each calendar year, and on such other dates as may be prescribed by law or regulation, the Custodian shall deliver a written statement to the Participant, by mail to the Participant’s last known address, electronically (if consented to by the Participant or otherwise permitted) or by such other means as may be allowed by law, regulation or consent of the Participant. Such statement shall reflect:

(i) Receipts, disbursements and other SIMPLE IRA transactions during the calendar year (or such other period).

(ii) Assets and liabilities of the SIMPLE IRA as of the last day of the calendar year (or such other period).

(iii) Such other information as may be required by law or regulation, including, but not limited to such information concerning required minimum distributions as is prescribed by the Commissioner of Internal Revenue.

Unless the Participant or Beneficiary files a written statement of exceptions or objections to the SIMPLE IRA statement with the Custodian within 60 days after the mailing of the statement, the Participant or Beneficiary shall be deemed to have approved such statement and the Custodian shall be released from all liability to anyone (including any Participant’s spouse or Beneficiary) with respect to all matters set forth in the statement. No person other than a Participant, the spouse of a Participant or Beneficiary may require an accounting.

(c) The Custodian shall also provide the Employer or Participant, if applicable, with summary descriptions or other reports as may be required under Code Section 408(i) or other applicable law.

6.5 Right to Request Judicial Assistance. Anything to the contrary contained in the Client Agreement regarding arbitration notwithstanding, the Custodian shall have the right at any time to apply to a court of competent jurisdiction for judicial settlement of its accounts or for determination of any questions or construction that may arise or for instructions. The only necessary party defendant to any such action shall be the Participant or, if the Participant is deceased, the Beneficiary, but the Custodian may join any other person or persons as a party defendant. The costs, including attorney’s fees, of any such proceeding shall be charged to the SIMPLE IRA as an administrative expense under Article X.

6.6 Scope of Custodian’s Duties. The Custodian shall only have the duties that are specifically set forth herein. The Custodian shall have no duty to ascertain whether contributions, distributions or transfers comply with the SIMPLE IRA or the Code. The Custodian shall not make any investments or dispose of any investments held in a SIMPLE IRA, except upon the direction of the Participant or in accordance with Section 6.3(f). The Custodian shall be under no duty to question any directions of the Participant, to review any securities or other property held in a SIMPLE IRA, or to make suggestions to the Participant with respect to the investment, retention or disposition of any assets held in a SIMPLE IRA. The Custodian shall have no duty to prosecute or defend any legal action with respect to a SIMPLE IRA unless the Custodian is fully indemnified to its satisfaction and agrees to do so in a writing executed by an authorized representative of the Custodian.

6.7 Scope of Custodian’s Liability. The Custodian shall not be liable for any loss of any kind which may result from any action taken by it in accordance with the directions of the Participant or the Participant’s duly authorized representative or from any failure to act because of the absence of any such directions. The Custodian is entitled to act upon any instrument, certificate or form it believes is genuine and believes is signed or presented by the proper person or persons, and the Custodian need not investigate or inquire as to any statement contained in such document but may accept it as true and accurate.

6.8 Right to Adjudicate Claims of Multiple Beneficiaries. Should two or more Beneficiaries of a SIMPLE IRA give conflicting instructions or should two or more individuals or entities raise conflicting claims that they are each a Beneficiary of a SIMPLE IRA, the Custodian is authorized in its sole discretion and without liability because of fluctuating market conditions or otherwise to do any one or more of the following: (a) select which instructions to follow or claims to honor and which to disregard; (b) suspend all activity in the SIMPLE IRA, refuse to buy, sell or trade any security or commodity, and refuse to disburse any monies or properties, except upon written instructions signed by all Beneficiaries or claimants; (c) close the SIMPLE IRA and send any and all securities, monies or other property by ordinary mail to the owner and address of record, reporting such transaction as a distribution to the owner of record; or (d) take action pursuant to Section 6.5 above including but not limited to an interpleader action in any appropriate court, provided that the filing of any action shall not be deemed a waiver of the Custodian’s right to arbitrate under the Client Agreement and Section 11.7 below.

Article VII — Duties of the Participant or Beneficiary

7.1 Duties Under the Code. The Participant or, if the Participant is deceased, the Beneficiary, agrees to fulfill any obligations now or hereafter imposed on the Participant or Beneficiary by the Code or other applicable law or regulation. To the extent the Custodian performs such obligations at the request of the Participant or Beneficiary, the Participant or Beneficiary agrees to pay the Custodian such reasonable fee as the Custodian may charge for its services. Such fees shall be included with the fees charged pursuant to Article X hereof.

7.2 Furnishing Information. The Participant or, if the Participant is deceased, the Beneficiary, shall furnish the Custodian with such information and documents as the Custodian may reasonably require. If the Participant or Beneficiary fails to furnish such information or documents, the Custodian may, at its sole discretion, terminate the SIMPLE IRA and distribute to the Participant or Beneficiary, in a lump sum payment, an amount equal to the assets in the account less an amount deemed reasonably necessary by the Custodian for the payment of all unpaid fees, expenses, charges, taxes or other liabilities of the SIMPLE IRA, whether or not liquidated.

7.3 Indemnification of Custodian. The Participant or, if the Participant is deceased, the Beneficiary, shall indemnify and hold the Custodian harmless from any liability which may arise hereunder except liability arising from the gross negligence or willful misconduct of the Custodian.

Article VIII — Resignation or Removal of Custodian

8.1 Resignation or Removal. The Custodian may resign at any time by giving at least 30 days written notice to the Participant, or, if the Participant is then deceased, to the Participant’s Beneficiary, and may, but is not required to, designate a qualified successor Custodian upon such notice of resignation. The appointment of the successor Custodian shall become effective at the time the resigning Custodian ceases to act. The Custodian may be removed by a Participant (or, if applicable, Participant’s Beneficiary) at any time by giving at least 30 days written notice to the Custodian. The notice period may be waived by the party entitled to the notice.

8.2 Successor Custodian or Trustee. Upon the resignation or removal of the Custodian, the Participant or the Beneficiary, if the Participant is deceased, shall either accept the Custodian’s appointment of a successor or appoint a successor Custodian. The Participant or, if applicable, the Beneficiary, may only designate, as successor Custodian, a bank or other person or institution approved by the Secretary of the Treasury to hold SIMPLE IRA or IRA assets, as appropriate. In the event the Custodian resigns and appoints a successor, the Participant’s failure to appoint a successor Custodian, on or before the effective date of such resignation and appointment (as set forth in the notice described in Section 8.1 above), shall constitute the Participant’s consent to the successor appointed by the Custodian. The successor shall have all rights, powers, privileges, liabilities and duties of the Custodian. Upon acceptance of appointment by the successor, the Custodian shall assign, transfer and deliver to the successor all assets and liabilities of the SIMPLE IRA. The Custodian is authorized, however, to reserve such funds as it deems advisable to provide for the payment of expenses, fees, taxes and other liabilities of the SIMPLE IRA, liquidated or not, then unpaid or to be incurred in connection with the settlement of the Custodian’s account, and any balance remaining after the settlement of its account shall be paid to the successor Custodian. If no qualified successor is designated by the Custodian or the Participant (or Beneficiary, if applicable) within 30 days of the notice of resignation or removal, the Custodian may distribute to the Participant (or Beneficiary, if applicable), the entire interest in the SIMPLE IRA in a lump sum.

8.3 Substitution of Custodian. The Custodian shall substitute another trustee or custodian in place of the Custodian upon notification by the Internal Revenue Service that such substitution is required because the Custodian has failed to comply with the requirements of Section 1.408-2(e) of the Income Tax Regulations, or is not keeping such records, making such returns, or rendering such statements as are required by said regulations.

Article IX— Amendment or Termination

9.1 Amendment or Termination. The Custodian or any successor custodian or trustee, may amend or terminate the SIMPLE IRA or related agreements, including the Adoption Agreement, at any time, provided that notice of such amendment or termination be provided to the Participant in writing. The Participant shall be deemed to have consented to any such amendment unless within 30 days after such notice, the Participant terminates (or transfers) his or her SIMPLE IRA. No amendment of the SIMPLE IRA, however, shall deprive any Participant, spouse of a Participant, or Beneficiary of any benefit to which such person was entitled under the SIMPLE IRA from contributions made prior to the amendment, unless the amendment is necessary to conform the SIMPLE IRA to the current or future requirements of the Employee Retirement Income Security Act of 1974, as amended, the Code or other applicable law, regulation or ruling, in which case the Custodian is expressly authorized to make amendments that are necessary for such purposes retroactively to the later of the effective date of the SIMPLE IRA or the effective date of such legal requirements.

9.2 Distribution on Termination. If the SIMPLE IRA is terminated by the Custodian for any reason, the Custodian shall distribute the balance held in each SIMPLE IRA for the benefit of a Participant, spouse of a Participant, or Beneficiary, to a successor custodian or trustee designated by the Participant, spouse of the Participant, or the Beneficiary, on whose behalf the SIMPLE IRA is held and if no such successor is designated, in a lump sum directly to the individual, provided, however, that the Custodian may exclude from any such distribution cash or property deemed reasonably necessary by the Custodian for the payment of all unpaid fees, expenses, taxes, charges and other liabilities of the SIMPLE IRA, liquidated or not.

Article X— Fees and Expenses

10.1 Compensation of the Custodian. The Custodian shall be entitled to reasonable compensation for its services hereunder and to reimbursement for all reasonable expenses incurred in maintaining the SIMPLE IRA. The Custodian shall notify the Participant in writing of its fees and of any changes in fees. The Participant and the Custodian agree that the Custodian has the absolute right to amend, revise or substitute fee schedules included, identified or referred to in the Disclosure Statement, and no amendment, revision or substitution of a fee schedule shall be deemed an amendment of the Agreement.

10.2 Payment of Fees and Expenses. The Participant is responsible for paying any maintenance, custodial, or related administrative charges that the Custodian might reasonably require and disclose in connection with the process of opening, or maintaining, the SIMPLE IRA. Brokerage fees, commissions and related expenses shall be paid in the customary manner. In the event a SIMPLE IRA is terminated or transferred, a termination or transfer fee shall be due and payable on the date of the termination or transfer; provided, however, that if this SIMPLE IRA is designated by the Employer to receive contributions under a SIMPLE IRA Plan, the Participant shall have the right, without cost or penalty, to transfer SIMPLE IRA assets pursuant to Section 5.1 above, or to roll over the SIMPLE IRA assets following a distribution pursuant to Section 4.1 above, to a SIMPLE retirement account maintained by another financial institution. Reimbursement for expenses shall be due and payable upon demand. The Employer may elect to pay all or a portion of the fees and administrative expenses with respect to a SIMPLE IRA. The Custodian reserves the right, in its sole discretion, to elect to discount or waive certain fees from a SIMPLE IRA, including but not limited to SIMPLE IRA maintenance fees, for certain customers. To effect payment of fees from a SIMPLE IRA, the Custodian will liquidate assets in accordance with Section 6.3(f).

10.3 Deduction of Fees and Expenses. Notwithstanding any of the provisions of this SIMPLE IRA, each Participant’s SIMPLE IRA shall be subject to the reasonable fee, charges and expenses of the Custodian, as described in the SIMPLE IRA document, the Disclosure Statement, and other fee schedules and documentation, as may be amended from time to time. The Custodian may deduct from and charge against a SIMPLE IRA all reasonable fees and expenses incurred in maintaining the SIMPLE IRA which have not been timely paid by the Participant. The Custodian may allocate such fees and expenses among a Participant’s SIMPLE IRA s at such time or times and in such a manner as the Custodian, in its reasonable discretion, determines. To effect the payment of fees and expenses from a SIMPLE IRA, the Custodian may liquidate assets held in the SIMPLE IRA in accordance with Section 6.3(f).

Article XI— Miscellaneous

11.1 Prohibited Transactions. Notwithstanding anything contained herein to the contrary, no Participant, spouse of a Participant or Beneficiary shall be entitled to borrow from or use a Participant’s SIMPLE IRA, or any portion thereof, as security for a loan, nor shall the Participant, Custodian or any other person or institution engage in any prohibited transaction within the meaning of Code Section 4975 with respect to any Participant’s SIMPLE IRA.

11.2 Prohibition Against Assignment of Benefits. Except to the extent otherwise required by law, none of the amounts held in a SIMPLE IRA on behalf of any Participant, spouse of a Participant or Beneficiary shall be subject to the claims of any of their creditors nor shall any Participant, spouse of a Participant or Beneficiary have the right to anticipate, sell, pledge, option, encumber or assign any of the benefits, payments or proceeds to which he or she is or may be entitled under the SIMPLE IRA.

11.3 Governing Law. The SIMPLE IRA is intended to qualify as a SIMPLE retirement account under Code Section 408(p) and shall be governed by and interpreted under the laws of the United States, except that, to the extent not preempted by Federal law, the SIMPLE IRA shall be governed by the laws of New York.

11.4 SIMPLE IRA Only Source of Benefits. Each Participant, spouse of a Participant or Beneficiary shall look solely to the assets of the SIMPLE IRA held on his or her behalf for the payment of any benefits to which he or she is entitled hereunder. 

11.5 Commingling. The assets of a SIMPLE IRA will not be commingled with other property except in a common trust fund or common investment fund under Code Section 408(a)(5).

11.6 Exclusive Benefit. The SIMPLE IRA is established for the exclusive benefit of the Participant or his/her Beneficiary or Beneficiaries. The interest of the Participant in the balance of this SIMPLE IRA shall at all times be nonforfeitable.

11.7 Arbitration. Any claims or controversies with the Custodian related to this SIMPLE IRA are subject to arbitration in accordance with the Client Agreement executed by or on behalf of the Participant.

DISCLOSURE STATEMENT

E*TRADE from Morgan Stanley SIMPLE IRA Disclosure Statement

(As of January 1, 2023)

This E*TRADE from Morgan Stanley Disclosure Statement (the “Disclosure Statement”) describes the Morgan Stanley SIMPLE IRA, a SIMPLE retirement account meeting the requirements of Section 408(p) of the Internal Revenue Code (the “Code”), and provides an overview of the Federal tax rules that apply to SIMPLE IRAs. This disclosure statement applies to all such SIMPLE IRAs on and after January 1, 2023. You should carefully review the following information and discuss it with your tax advisor. You may also want to review IRS Publications 590-A (Contributions to Individual Retirement Arrangements) and 590-B (Distributions from Individual Retirement Arrangements) for further information on IRAs generally.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”) or an affiliate or successor of Morgan Stanley Smith Barney LLC will act as “Custodian” for your SIMPLE IRA.

By (i) signing the E*TRADE from Morgan Stanley SIMPLE IRA Application (the “SIMPLE IRA Application”), which is referred to as the Morgan Stanley Adoption Agreement or Adoption Agreement in the SIMPLE IRA or attesting to such through forms of electronic attestation acceptable to Morgan Stanley and (ii) having contributions made as described below, you complete Morgan Stanley’s requirements to establish a SIMPLE IRA custodied with Morgan Stanley and become a “Participant” in the SIMPLE IRA.

The SIMPLE IRA may be established only to receive contributions under a Code Section 408(p) qualified salary reduction arrangement (known as a “Savings Incentive Match Plan for Employees” or “SIMPLE”) maintained by your employer. This arrangement is referred to in this Disclosure Statement as your employer’s “SIMPLE IRA Plan.” Your SIMPLE IRA will also accept rollover contributions and transfers from another SIMPLE IRA of the participant. If more than two years have passed since you first participated in any SIMPLE IRA plan sponsored by your employer, you may be able to make a rollover contribution to your SIMPLE IRA of eligible rollover amounts distributed from other eligible retirement plans (e.g., Traditional IRA, 401(k) plan, etc.). No other contributions may be made to the SIMPLE IRA. To make Traditional or Roth IRA contributions, you must establish an individual retirement account such as the Morgan Stanley IRA or Roth IRA using a separate adoption agreement and Client Agreement.

The duly authorized representatives of certain individuals or their estates may establish a SIMPLE IRA on behalf of such individuals. These representatives generally include a parent on behalf of a minor child, a legal guardian on behalf of an incapacitated adult or minor child, an executor or beneficiary of a deceased individual, an attorney-in-fact acting under a properly executed power of attorney.

Please read this Disclosure Statement carefully to understand the legal requirements and Federal income tax considerations involved in maintaining your SIMPLE IRA. Morgan Stanley is required by Federal tax rules to provide this information to you. However, Morgan Stanley does not provide legal or tax advice. Morgan Stanley recommends that you consult your legal and/or tax advisor if you have questions about the legal or tax consequences of your contributions to, investments by or distributions from your SIMPLE IRA.

The E*TRADE from Morgan Stanley SIMPLE IRA is governed by the written terms of the SIMPLE IRA document (the “SIMPLE IRA document”), the SIMPLE IRA Application, this Disclosure Statement and the E*TRADE from Morgan Stanley Client Agreement for Self-Directed Accounts (the “Self-Directed Account Agreement”), which is referred to as the Morgan Stanley Client Agreement or Client Agreement in the SIMPLE IRA document, all of which have been made available to you. In case of a conflict between those or any other material describing the SIMPLE IRA, the SIMPLE IRA document and SIMPLE IRA Application will govern.

Please bear in mind when reading the Disclosure Statement that “you” refers to the Participant maintaining the SIMPLE IRA and “we,” “us,” or “our” refers to Morgan Stanley as Custodian. Throughout this document, the term “year” means a calendar year ending December 31 unless an express reference is made to a taxable year which may end on another date.

Capitalized terms used in this Disclosure Statement are defined in either Section VIII below or in Article I of the SIMPLE IRA document.

I. Right of Revocation by Participant

1. You become a Participant in the SIMPLE IRA by completing and signing a SIMPLE IRA Application. You have the right to revoke for a period of seven days from the earlier of (a) your establishing the SIMPLE IRA by signing the SIMPLE IRA Application or (b) funding the SIMPLE IRA.

2. You may exercise your right to revoke by submitting your written notice of revocation to us within the seven day period, using the IRA Distribution Request Form and following directions provided on that form. The IRA Distribution Request Form can be submitted to us by mail, fax, or using our document upload tool (the instructions for document upload are on the form). Our mailing address is E*TRADE from Morgan Stanley, PO Box 484, Jersey City, NJ 07303-0484, and our fax number is 1-866-650-0003. [RB(1]. You will be treated as having revoked your SIMPLE IRA on either (1) the date of the postmark (or if sent by certified or registered mail, the date of certification or registration) if you deposit your written notice in the United States mail in an envelope, or other appropriate wrapper, first-class postage prepaid, properly addressed; or (2) the date you deliver your notice to a private delivery service recognized by the Internal Revenue Service (“IRS”) for filing tax returns. This method of determining when you have revoked your SIMPLE IRA, or taken some other action described below, is referred to as the “Postmark Rule.” Your revocation notice shall not be valid unless received by Morgan Stanley, directly or under the Postmark Rule, within the seven-day revocation period.

3. If a material adverse change is made in the Disclosure Statement or the SIMPLE IRA document while you still have the right to revoke the SIMPLE IRA, we will inform you of the change, and you shall be permitted to revoke the SIMPLE IRA for a period of seven days from the date you receive such notice.

4. If you revoke the SIMPLE IRA, we will return to you, or your employer, as appropriate, the full amount contributed, if any, without reductions for fees or other charges or adjustments for changes in market value. Cancellation of your SIMPLE IRA after that point are subject to the normal adjustments for fees, sales commissions, administrative expenses and market value fluctuations.

5. If you are eligible to receive contributions under your employer’s SIMPLE Plan and you have not established a SIMPLE IRA to receive such contributions, then your employer may be able to establish a SIMPLE IRA on your behalf. In such a case, only your employer may revoke the SIMPLE IRA within the seven-day period.

II. Internal Revenue Code Requirements

The SIMPLE IRA document meets the following Code requirements:

1. Your annual pretax salary reduction contributions (known as “elective deferrals”) must be in cash and may not exceed the lesser of (a) 100% of your compensation or (b) the sum of the Applicable Dollar Amount (see chart below) plus, if you are age 50 or older by the end of any year, Catch-Up Contributions (see chart below). These limits do not apply to rollover contributions described in IV(l)(c) below.

You may contribute up to the Applicable Dollar Amount for the years below as shown on the chart below:

Years Applicable Dollar Amounts
2022 $14,000
2023 $15,500

The Applicable Dollar Amount is subject to cost-of-living adjustments (“COLAs”) in future years determined by the U.S. Treasury in $500 increments.

If you are age 50 or over, you may, in addition to the Applicable Dollar Amount, make salary reduction Catch-Up Contributions up to the amounts shown on the chart below:

Years Catch-Up Contribution
2015 through 2022 $3,000
2023 $3,500

Catch-Up Contributions are subject to COLAs in future years determined by the U.S. Treasury in $500 increments.

If you are eligible, any annual contribution you make that exceeds your Applicable Dollar Amount will be treated as a Catch-Up Contribution (up to the limits described above) unless you elect to treat such amounts as an Excess Contribution described in IV(4)(c) below.

Your employer’s annual contributions may not exceed either:

(a) The lesser of your annual pretax contributions or 3% of your compensation; or

(b) 2% of your compensation up to $200,000 (subject to cost-of-living adjustments; $330,000 for 2023), depending upon whether your employer elects to make matching or nonelective contributions, respectively, as described in IV(1)(b) below.

A definition of the term “compensation” is set forth in your employer’s SIMPLE IRA Plan.

2. Your SIMPLE IRA must be established with a qualified trustee or custodian, such as Morgan Stanley Smith Barney LLC, which is an organization approved by the IRS to act as a Custodian for SIMPLE IRAs.

3. Your SIMPLE IRA assets may not be invested in life insurance contracts or in collectibles such as art, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages or any other tangible personal property classified by the Secretary of the Treasury or the Secretary’s delegate as a collectible within the meaning of Code Section 408(m) except for certain coins and certain bullion, as described in Code Section 408(m)(3)(where the Custodian has specifically agreed to hold such coins and bullion).

4. Your interest in your SIMPLE IRA will be nonforfeitable at all times.

5. Your SIMPLE IRA assets will not be commingled with other property except in a common trust or investment fund.

6. Required Minimum Distributions.

(a) In General. You must withdraw a minimum amount (the “required minimum distribution” or “RMD”) from your SIMPLE IRA for each year commencing with the year in which you attain age 70½ (if you were born before July 1, 1949) or 72 (if you were born after June 30, 1949) (“RMD Age”), including the year of the SIMPLE IRA owner’s death. Each such year is known as a Distribution Calendar Year or “DCY.” You may delay withdrawing your RMD for the year in which you attain RMD Age until April 1 of the following year. This is known as your “required beginning date” or “RBD.” The RMD for each succeeding year must be withdrawn by December 31 of each such year. Please note that if you delay your RMD for your first DCY until the next year, you will have to withdraw amounts equal to two RMDs during your second DCY.

(b) RMDs May Be Withdrawn from Any IRA. Your RMD must be calculated separately for each SIMPLE IRA you maintain, but the aggregate of all your RMDs may be withdrawn from any one or more IRAs (including SIMPLE, Traditional and SEP IRAs), but you exclude any Roth IRAs, Education Savings Accounts or IRAs you hold as a beneficiary of a deceased individual.

(c) Calculating Your Minimum Required Distribution.

(i) Using the Uniform Table. You calculate your yearly RMD by dividing the balance in your SIMPLE IRA as of December 31 of the prior year by your life expectancy factor (also referred to as an “applicable divisor” or “applicable distribution period” in various IRS publications). To find your life expectancy factor for a DCY, you should look on the Uniform Table (also known as the “Lifetime Table”), published by the IRS as Table III in Publication 590-B. The life expectancy factor or applicable distribution period will be next to your age as of your birthday in the DCY. You must refer back to the Uniform Table each year to determine your life expectancy factor using your age as of your birthday in that year.

Here is an example of how RMDs are calculated using the Uniform Table. Suppose that a SIMPLE IRA owner attains RMD Age in year 2, that on his birthday in year 2 the SIMPLE IRA owner is 72 years old and that, on December 31 of year 1, the SIMPLE IRA owner’s account balance was $100,000. The SIMPLE IRA owner’s RMD for the first DCY (year 1) will be $3,649.64 ($100,000 ÷ life expectancy factor at age 72 of 27.4). Continuing with our example, if, on December 31 of year 2, the SIMPLE IRA account balance is $105,000, the RMD for year 3 will be $3,962.26 ($105,000 ÷ Age 73 life expectancy factor of 26.5).

(ii) Calculating RMD with Younger Spouse Beneficiary. If the sole primary beneficiary of your SIMPLE IRA for the entire calendar year is your spouse and your spouse is more than 10 years younger than you, you may calculate RMDs by using the joint life expectancy factor for the ages of you and your spouse as of your birthdays in each DCY. You will find your joint life expectancy factor (applicable divisor) in Table II in the IRS Publication 590-B. You must refer to this table for the joint life expectancy factor for every DCY in which both you and your younger spouse are alive. Once you find your joint life expectancy factor, you calculate your RMD in the same way as described in (a) above for Uniform Table users. This rule may also be used if your spouse is the sole beneficiary of a Pass-Through Trust described in Section (7)(b)(iv) below. If your younger spouse dies before you or you change your beneficiary for any reason, you must use the Uniform Table.

(d) Any annuity contract purchased as part of your SIMPLE IRA must meet the minimum distribution rules that apply to such contracts. These may be different from the rules described in Section 6 above.

(e) Further details about calculating RMDs are found in Section 4.3 of the SIMPLE IRA document and IRS Publication 590-B.

7. Post-Death RMD.

(a) This Section (7) sets forth the rules for RMDs paid after the death of the SIMPLE IRA owner (Post-Death RMDs). The application of the Post-Death RMD rules to a Beneficiary depends on the following:

(i) The identity of the Beneficiary and whether there are multiple Beneficiaries of the SIMPLE IRA.

(ii) Whether the SIMPLE IRA owner died before January 1, 2020, or after December 31, 2019.

(iii) If the SIMPLE IRA owner died before January 1, 2020, whether the SIMPLE IRA owner died before the required beginning date, or died on or after the required beginning date, and whether the SIMPLE IRA is treated as having an Applicable Designated Beneficiary or no Applicable Designated Beneficiary.

(iv) If the SIMPLE IRA owner died after December 31, 2019, whether the SIMPLE IRA is treated as having an Applicable Designated Beneficiary, an Applicable Eligible Designated Beneficiary, or no Applicable Designated Beneficiary.

(v) If the SIMPLE IRA is treated as having no Applicable Designated Beneficiary (because, for example, the Beneficiary is not an individual or a trust that qualifies for special treatment), whether the SIMPLE IRA owner died before the required beginning date, or died on or after the required beginning date.

The RMD payout period and/or method will be based on one of the following: (a) the identity of the Applicable Designated Beneficiary (if there is one), (b) the determination that there is no Applicable Designated Beneficiary or (c), in certain instances, the identity of the Applicable Eligible Designated Beneficiary (if there is one). If there are multiple Beneficiaries of the SIMPLE IRA, the RMD payout period and/or method for one or more of the Beneficiaries may be based on the identity of a different Beneficiary because that other Beneficiary may qualify as either the Applicable Designated Beneficiary or the Applicable Eligible Designated Beneficiary, or may cause the SIMPLE IRA to be treated as having no Applicable Designated Beneficiary.

(b) Determining the Beneficiary for Purposes of the Post-death RMD rules. This subsection provides a summary of rules for determining the identity of the Beneficiary(ies) for purposes of ascertaining the RMD payout period and/or method.

(i) Which Beneficiary(ies) must be taken into account: In general, the Beneficiary(ies) required to be taken into account is the individual(s) or entity(ies) who is:

(a) designated as the Beneficiary(ies) by either the terms of the SIMPLE IRA document or an affirmative election by the SIMPLE IRA owner, in writing, in a form acceptable to Morgan Stanley, and

(b) Beneficiary(ies) as of the SIMPLE IRA owner’s date of death, and

(c) remains a Beneficiary as of September 30 of the year after the year of the SIMPLE IRA owner’s death.

Note: In general, a Beneficiary of the SIMPLE IRA will not be taken into account if, before September 30 of the year after the year of the SIMPLE IRA owner’s death, the Beneficiary either (a) properly and timely disclaims his or her entire interest in the SIMPLE IRA in accordance with federal tax law and applicable state law, or (b) takes a taxable distribution of the Beneficiary’s entire interest in the SIMPLE IRA. However, if a person who is a Beneficiary as of the owner’s date of death dies before September 30 of the year following the year of the owner’s death without properly and timely disclaiming their interest in the SIMPLE IRA, the Beneficiary is required to be taken into account for purposes of determining the RMD payout period and/or method.

(ii) Single Beneficiary:

(a) If there is only one Beneficiary of the SIMPLE IRA that is required to be taken into account under the rules described in paragraph (i) of this Section (7)(b) and/or by operation of the separate account rules described in paragraph (iii) (b), then the following applies:

(a) If the Beneficiary is an individual, the SIMPLE IRA is treated as having an Applicable Designated Beneficiary for purposes of determining the RMD payout period and/or method and the Beneficiary shall be treated as the Applicable Designated Beneficiary. If the Applicable Designated Beneficiary is the SIMPLE IRA owner’s surviving spouse, the surviving spouse will be considered the sole Applicable Designated Beneficiary of the SIMPLE IRA.

(b) If the Beneficiary is an entity (except for certain trusts, as described later), the SIMPLE IRA is treated as having no Applicable Designated Beneficiary for purposes of determining the RMD payout period and/or method.

(iii) Multiple Beneficiaries:

(a) In general, if there is more than one Beneficiary of the SIMPLE IRA that is required to be taken into account under the rules described in paragraph (i) of section (7)(b), then, unless separate inherited SIMPLE IRAs are timely established for each Beneficiary in accordance with the separate account rules described in paragraph (iii)(b) of Section (7)(b),

(i) If all the Beneficiaries required to be taken into account are individuals, the SIMPLE IRA is treated as having an Applicable Designated Beneficiary for purpose of determining the RMD payout period and/or method and the Beneficiary with the shortest life expectancy shall be treated as the Applicable Designated Beneficiary for purposes of applying the RMD rules. Note, however, even if the Beneficiary with the shortest life expectancy is the SIMPLE IRA owner’s surviving spouse, the surviving spouse will not be considered the sole Applicable Designated Beneficiary of the SIMPLE IRA.

(ii) If any of the Beneficiaries required to be taken into account is an entity (except for certain trusts, as described later), the SIMPLE IRA is treated as having no Applicable Designated Beneficiary for purposes of determining the RMD payout period and/or method.

(b) Separate Account Rule: If the SIMPLE IRA is split into separate inherited SIMPLE IRAs for each Beneficiary of the SIMPLE IRA on or before the end of the year following the year of the SIMPLE IRA owner’s death, the RMD rules will be applied separately to each Inherited SIMPLE IRA, meaning only the Beneficiary for which the Inherited SIMPLE IRA is established is required to be taken into account for purposes of determining the RMD payout period and/or method. These separate account rules can- not be used for, or by, beneficiaries of a trust with respect to the trust’s interest in the SIMPLE IRA as a named Beneficiary of such SIMPLE IRA. Morgan Stanley will generally require each beneficiary to submit paperwork to open such separate inherited SIMPLE IRAs.

(iv) Pass-Through Trust as Beneficiary

(a) A trust is treated as entity and generally does not qualify as an Applicable Designated Beneficiary for RMD purposes. However, if the trust qualifies as a Pass-Through Trust (as defined below), the beneficiaries of the trust will be treated as having been designated as the beneficiaries of the SIMPLE IRA for purposes determining the Beneficiary(ies) under these Post-Death RMD rules. As indicated above, the separate account rules cannot be used for, or by, beneficiaries of a trust with respect to the trust’s interest in the SIMPLE IRA as a named Beneficiary of such SIMPLE IRA.

(b) Definition of Pass-Through Trust. To be treated as a Pass-Through Trust, the trust must satisfy the following conditions: (A) a valid trust under applicable state law (or would be, but for the fact that there is no corpus), (B) the trust is irrevocable or will become irrevocable no later than the SIMPLE IRA owner’s date of death, (C) the beneficiary(ies) of the trust who are beneficiaries with respect to the trust’s interest in the SIMPLE IRA are identifiable from the trust instrument, and (D) the trustee provides the SIMPLE IRA Custodian with either a copy of the trust (and any amendments) or a written certification that indicates (A) and (B) are true, and includes (among other things) a final list of all the beneficiaries (including contingent and remainder beneficiaries) of the trust as of September 30 of the year following the year of the SIMPLE IRA owner’s death, detailing each beneficiary’s share of the SIMPLE IRA and the conditions to their entitlement to the SIMPLE IRA (the “Required Documentation”). The trustee must provide the Custodian with a new certification if there is a change in the trust that would change the original certification. The Required Documentation must be provided to the SIMPLE IRA custodian by October 31st of the year following the year of the SIMPLE IRA owner’s death. Morgan Stanley has a trustee certification form for this purpose and generally requires the trustee to use this form to satisfy the Required Documentation condition. In general, a Pass-Through Trust may be any type of trust (personal, testamentary, credit shelter, qualified terminable interest, etc.) so long as it satisfies the four criteria listed in this paragraph.

(c) RMD Payout Period and/or Methods:

(i)  Life Expectancy Methods

(a) Non-spouse Life Expectancy Method. Under the Non-spouse Life Expectancy Method, the Beneficiary calculates RMDs for each DCY by dividing the SIMPLE IRA account balance as of December 31st of the prior year by the applicable life expectancy factor. The life expectancy factor for the first DCY  is determined using the IRS Single Life Expectancy Table (IRS Publication 590-B, Appendix B, Table I) and the age of the Applicable Designated Beneficiary as of the Applicable Designated Beneficiary’s birthday in the first DCY (Note: a Beneficiary taking RMDs based on the life expectancy method may be required to determine the life expectancy factor using the age of the Applicable Designated Beneficiary determined under subsection (b) of this section (7), instead of his or her own age). The first DCY for the Beneficiary is the first calendar year after the year of death. For each succeeding year, the life expectancy factor will be the prior year’s factor minus one. This continues until the life expectancy factor is less than one. In that year, the entire remaining balance of the SIMPLE IRA must be distributed. This method of distribution is often referred to as “nonrecalculation” or “term certain” because the Applicable Designated Beneficiary’s life expectancy is not recalculated each year.

(b) Deceased SIMPLE IRA Owner Life Expectancy Method. Under the Deceased SIMPLE IRA Owner Life Expectancy Method, Post-Death RMDs are calculated each DCY by dividing the SIMPLE IRA account balance as of December 31st of the prior year by the applicable life expectancy factor. The life expectancy factor is determined using the IRS Single Life Expectancy Table (IRS Publication 590-B, Appendix B, Table I) and the age of the SIMPLE IRA owner as of his or her birthday in the year of his or her death and subtracting one for each subsequent year. This continues until the life expectancy factor is less than one. In that year, the entire remaining balance of the SIMPLE IRA must be distributed.

(c) Spousal Life Expectancy Method. Under the Spousal Life Expectancy Method, post-death RMDs are calculated for each DCY during the surviving spouse’s lifetime by dividing the SIMPLE IRA account balance as of December 31st of the prior year by the applicable life expectancy factor. The life expectancy factor for each DCY is determined using the IRS Single Life Expectancy Table (IRS Publication 590-B, Appendix B, Table I) and the spouse’s actual age as of his or her birthday in each DCY. This is known as the “recalculation” method.

(d) Note: Unlike RMDs each year during the IRA owner’s lifetime, Post-Death RMDs must generally be calculated and paid separately to the Beneficiary from each of the inherited IRAs established for the Beneficiary, except that the RMD payable to a Beneficiary from one inherited IRA may be withdrawn from another inherited IRA that the Beneficiary holds as beneficiary of the same decedent.

(ii) 5-year Rule. Under the 5-year Rule, the Beneficiary is required to withdraw the Beneficiary’s entire interest in the SIMPLE IRA no later than December 31st of the fifth year following the year of the SIMPLE IRA owner’s death, but may take distributions that exhaust the SIMPLE IRA at any time as long as the Beneficiary’s entire interest is distributed before the end of the fifth year following the year of the SIMPLE IRA owner’s death.

(iii) 10-year Rule. Under the 10-year Rule, the Beneficiary is required to withdraw the Beneficiary’s entire interest in the SIMPLE IRA no later than December 31st of the tenth year following the year of the SIMPLE IRA owner’s death, but may take distributions that exhaust the SIMPLE IRA at any time as long as the Beneficiary’s entire interest is distributed before the end of the tenth year following the year of the SIMPLE IRA owner’s death.

(d) RMD Rules Applicable to Beneficiaries of a SIMPLE IRA Owner Who Died Before January 1, 2020. If the SIMPLE IRA owner died before January 1, 2020, the application of the RMD rules to a Beneficiary depends on whether the SIMPLE IRA owner died before the RBD, or on or after the RBD.

(i) Death Before Required Beginning Date.

(a) SIMPLE IRA Is Treated as Having No Applicable Designated Beneficiary:

i. If the SIMPLE IRA is treated as having no Applicable Designated Beneficiary and the SIMPLE IRA owner died before RBD, the Beneficiary(ies) of the SIMPLE IRA are subject to the 5-year Rule.

(b) Surviving Spouse Is Not the Sole Applicable Designated Beneficiary:

i. If the SIMPLE IRA is treated as having an Applicable Designated Beneficiary, but the SIMPLE IRA owner’s surviving spouse is not considered the sole Applicable Designated Beneficiary of the SIMPLE IRA (as described in subsection (b)(i) and (ii) of this section (7)), the Beneficiary(ies) must take RMDs each DCY by December 31st of the DCY using the Non-spouse Life Expectancy Method, unless a Beneficiary elects to use the 5-year Rule. The first DCY for the Beneficiary is the first calendar year after the year of death.

ii. Death of Beneficiary Before January 1, 2020. If the Beneficiary dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary must continue to take RMDs after the deceased Beneficiary’s death, based on the distribution schedule that was used by the deceased Beneficiary prior to his or her death.

iii. Death of Beneficiary After December 31, 2019. If the Beneficiary dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary is subject to the 10-year Rule (But see “Caution” under Section II(6)(e)).

(c) Surviving Spouse Is the Sole Applicable Designated Beneficiary:

i. If the SIMPLE IRA is treated as having an Applicable Designated Beneficiary and the SIMPLE IRA owner’s surviving spouse is considered the sole Applicable Designated Beneficiary of the SIMPLE IRA, the surviving spouse is not required to start taking RMDs until the later of December 31 of the (A) year after the year of the SIMPLE IRA owner’s death, or (B) the year in which the SIMPLE IRA owner would have attained 70½. Once the surviving spouse is required to start taking RMDs, the surviving spouse must take RMDs each DCY by December 31st of the DCY using the Spousal Life Expectancy Method, unless the surviving spouse elects to use the 5-year Rule.

ii. Death of Spousal Applicable Designated Beneficiary Before January 1, 2020. If the surviving spouse is the sole Applicable Designated Beneficiary and dies before the SIMPLE IRA is exhausted, the spouse’s Remainder Beneficiary may continue to receive annual payments from the SIMPLE IRA but must change the life expectancy method to a nonrecalculating method. This is done by taking the spouse’s life expectancy factor for the spouse’s year of death and subtracting one for each subsequent year until the factor is less than one. The RMD for each year is calculated by dividing the prior year’s December 31st account balance by the applicable life expectancy factor. When the life expectancy factor for a DCY is less than one, the entire SIMPLE IRA must be distributed during that year.

iii. Death of Spousal Applicable Designated Beneficiary After December 31, 2019. If the surviving spouse is the sole Applicable Designated Beneficiary and dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary is subject to the 10-year Rule  (But see “Caution” under Section II(6)(e)).

iv. Death of Surviving Spouse Before RMDs Begin. If the surviving spouse is the sole Applicable Designated Beneficiary and dies before December 31 of the year he or she must begin receiving RMDs, the surviving spouse will be treated as if he or she was the SIMPLE IRA owner for purposes of determining the RMD payout period and/or method applicable to the surviving spouse’s Beneficiary(ies). Note, however, if the surviving spouse has remarried, his or her new spouse may not use the special rules for surviving spouses set forth in this paragraph but is, instead, treated as a nonspouse Beneficiary of the decedent’s SIMPLE IRA.

v. Special Election to Treat Decedent’s SIMPLE IRA as Spouse’s Own SIMPLE IRA. If the SIMPLE IRA owner’s surviving spouse is considered the sole Applicable Designated Beneficiary and has an unlimited right of withdrawal from the SIMPLE IRA, the surviving spouse may elect to treat the SIMPLE IRA as the surviving spouse’s SIMPLE IRA. In general, the special election may be made at any time. This special election is automatically deemed to have been made if the surviving spouse either (A) fails to take the RMD for a year as a beneficiary of the SIMPLE IRA, or (B) makes any form of contribution to the SIMPLE IRA. Once this election is made the SIMPLE IRA is treated as the Spouse’s SIMPLE IRA for all purposes including the RMD rules.

(ii) Death On or After Required Beginning Date.

(a) RMD for Last Year of SIMPLE IRA Owner’s Life. If the SIMPLE IRA owner died on or after the RBD, the RMD for the last year in which the SIMPLE IRA owner is alive (no matter how short a period of time) must be distributed from the SIMPLE IRA using the SIMPLE IRA owner’s life expectancy factor determined under Section II(6)(c) above. To the extent the SIMPLE IRA owner did not withdraw his or her entire RMD for the last year of his or her life, the Beneficiary(ies) must take the undistributed portion of such RMD before the end of that year.

(b) SIMPLE IRA Is Treated as Having No Applicable Designated Beneficiary:

i. If the SIMPLE IRA is treated as having no Applicable Designated Beneficiary and the SIMPLE IRA owner died on or after the RBD, the Beneficiary(ies) of the SIMPLE IRA must take RMDs each DCY by December 31st of the DCY, starting with the DCY after the year of the SIMPLE IRA owner’s death (Note, as indicated above, the Beneficiary(ies) may need to take the undistributed portion of the RMD for the last year of the SIMPLE IRA owner’s life). The RMD amount for each DCY is calculated using the Deceased SIMPLE IRA Owner Life Expectancy Method.

(c) Surviving Spouse Is Not Sole Applicable Designated Beneficiary:

i. If the SIMPLE IRA is treated as having an Applicable Designated Beneficiary, but the SIMPLE IRA owner’s surviving spouse is not considered the sole Applicable Designated Beneficiary of the SIMPLE IRA, the Beneficiary(ies) must take RMDs each DCY by December 31st of the DCY, starting with the DCY after the year of the SIMPLE IRA owner’s death (Note, as indicated above, the Beneficiary(ies) may need to take the undistributed portion of the RMD for the last year of the SIMPLE IRA owner’s life). The RMD amount for each DCY is calculated using the longer of the Non-spouse Life Expectancy Method or Deceased SIMPLE IRA Owner Life Expectancy Method.

ii. Death of Beneficiary before January 1, 2020. If the Beneficiary dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary must continue to take RMDs after the deceased Beneficiary’s death, based on the distribution schedule that was used by the deceased Beneficiary prior to his or her death.

iii. Death of Beneficiary after December 31, 2019. If the Beneficiary dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary is subject to the 10-year Rule  (But see “Caution” under Section II(6)(e)).

(d) Surviving Spouse Is Sole Applicable Designated Beneficiary:

i. If the SIMPLE IRA is treated as having an Applicable Designated Beneficiary and the SIMPLE IRA owner’s surviving spouse is considered the sole Applicable Designated Beneficiary of the SIMPLE IRA, the surviving spouse must take RMDs each DCY by December 31st of the DCY, starting with the DCY after the year of the SIMPLE IRA owner’s death (Note, as indicated above, the surviving spouse may need to take the undistributed portion of the RMD for the last year of the SIMPLE IRA owner’s life). The RMD amount for each DCY is calculated using the longer of the Spousal Life Expectancy Method or Deceased SIMPLE IRA Owner Life Expectancy Method.

ii. Death of Spousal Applicable Designated Beneficiary before January 1, 2020. If the surviving spouse is the sole Applicable Designated Beneficiary and dies before the SIMPLE IRA is exhausted, the spouse’s Remainder Beneficiary may continue to receive annual payments from the SIMPLE IRA. If the surviving spouse was using the Deceased SIMPLE IRA Owner Life Expectancy Method prior to his or her death, the RMDs will continue to be based on the distribution schedule that was used by the deceased spouse prior to his or her death. If the surviving spouse was using the Spousal Life Expectancy Method, the spouse’s Remainder Beneficiary must change the life expectancy method to a nonrecalculating method. This is done by taking the spouse’s life expectancy factor for the spouse’s year of death and subtracting one for each subsequent year until the factor is less than one. The RMD for each year is calculated by dividing the prior year’s December 31st account balance by the applicable life expectancy factor. When the life expectancy factor for a DCY is less than one, the entire SIMPLE IRA must be distributed during that year.

iii. Death of Spousal Applicable Designated Beneficiary after December 31, 2019. If the surviving spouse is the sole Applicable Designated Beneficiary and dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary is subject to the 10-year Rule (But see “Caution” under Section II(6)(e)).

iv. Special Election to Treat Decedent’s SIMPLE IRA as Spouse’s own SIMPLE IRA. If the SIMPLE IRA owner’s surviving spouse is considered the sole Applicable Designated Beneficiary and has an unlimited right of withdrawal from the SIMPLE IRA, the surviving spouse may elect to treat the SIMPLE IRA as the surviving spouse’s SIMPLE IRA. In general, the special election may be made at any time. This special election is automatically deemed to have been made if the surviving spouse either (A) fails to take the RMD for a year as a beneficiary of the SIMPLE IRA, or (B) makes any form of contribution to the SIMPLE IRA. Once this election is made, the SIMPLE IRA is treated as the Spouse’s SIMPLE IRA for all purposes including the RMD rules.

(e) RMD Rules Applicable to Beneficiaries of a SIMPLE IRA Owner Who Died After December 31, 2019.

CAUTION: At the time this was written, the IRS had not issued final regulations or other formal guidance addressing these new Post-Death RMD rules, so the information provided in this section is based on applying the rules and principals from the existing IRS regulations and other applicable IRS guidance to these new Post-Death RMD rules. The IRS may issue final regulations or other formal guidance that may alter or modify our understanding of these rules and cause the information provided in this section to be incorrect. Note that the IRS issued proposed regulations, interpreting the new Post-Death RMD rules. The IRS has taken an unexpected position in the proposed regulations with respect to the 10-year rule, indicating that, when a designated beneficiary is subject to the 10-year rule and the IRA owner died on or after the required beginning date, the designated beneficiary would need to satisfy both the at least as rapidly rule and the 10-year rule. Under this interpretation, the designated beneficiary would need to (a) continue to take annual RMD payments each calendar year under the at least as rapidly rule, using the longer of the remaining life expectancy of the deceased IRA owner or the designated beneficiary, and (b) withdraw the entire balance of the IRA by the end of the 10th calendar year following the year of the IRA owner’s death (even if the payout period under the at least as rapidly rule would have extended beyond the 10-year period). The proposed regulations appear to apply a similar rule once the 10-year rule is triggered (a) when an eligible designated beneficiary who is a minor reaches the age of majority, and (b) upon the death of an eligible designated beneficiary who is receiving life expectancy payments. These interpretations are contrary to the general understanding of the public and many comments were provided to the IRS in opposition to such interpretations. The proposed regulations have not been finalized and may change before becoming final. The following description of the Post-Death RMD rules does not incorporate the new interpretations expressed in the proposed regulations. You should discuss this information and the new Post-Death RMD rules with your own legal and tax advisor prior to taking any action.

(i) RMD for Last Year of a SIMPLE IRA Owner’s Life. If the SIMPLE IRA owner died on or after the RBD, the RMD for the last year in which the SIMPLE IRA owner is alive (no matter how short a period of time) must be distributed from the SIMPLE IRA using the SIMPLE IRA owner’s life expectancy factor determined under Section II(6)(c) above. To the extent the SIMPLE IRA owner did not withdraw his or her entire RMD for the last year of his or her life, the Beneficiary(ies) must take the undistributed portion of such RMD before the end of that year.

(ii) Eligible Designated Beneficiary and Applicable Multi-Beneficiary Trusts.

(a) Definition of Eligible Designated Beneficiary. In general, an Eligible Designated Beneficiary is an individual designated beneficiary who is

i. the surviving spouse of the SIMPLE IRA owner,

ii. a child of the SIMPLE IRA owner who is under the age of majority (once the child reaches the age of majority, the child will no longer be considered an Eligible Designated Beneficiary and, from that point forward, will generally be subject to the 10-year Rule),

iii. an individual who is not more than 10 years younger than the SIMPLE IRA owner,

iv. a disabled individual (as defined under the federal tax rules), or

v. a chronically ill individual (as defined under the federal tax rules).

(b) Applicable Multi-Beneficiary Trust

i. Definition of Applicable Multi-Beneficiary Trust. In general, an Applicable Multi-Beneficiary Trust is a trust (a) which has more than one beneficiary, (b) all of the beneficiaries of which are treated as Designated Beneficiaries for purposes of determining the RMD payout period and/or method, and (c) at least one of the beneficiaries is a chronically ill or disabled Eligible Designated Beneficiary.

ii. Special Rule for Applicable Multi-Beneficiary Trusts.

1. If under the terms of the Applicable Multi-Beneficiary Trust, it is to be divided immediately upon the death of the SIMPLE IRA owner into separate trusts for each beneficiary of the trust, it appears the separate trust(s) established for the disabled or chronically ill Eligible Designated Beneficiary will be treated separately and will qualify as an Eligible Designated Beneficiary for purposes of determining the RMD payout period and/or method.

2. If under the terms of the Applicable Multi-Beneficiary Trust no individual other than a chronically ill or disabled Eligible Designated Beneficiary has any right to the SIMPLE IRA until the death of all such Eligible Designated Beneficiaries of the trust, it appears the Applicable Multi-Beneficiary Trust will qualify as an Eligible Designated Beneficiary for purposes of determining the RMD payout period and/or method, but at the death of chronically ill or disabled Eligible Designated Beneficiary of the trust, the 10-year rule would apply.

iii. Determining the Beneficiary for Purposes of the New Post-Death RMD Rules. Although not entirely clear, it appears that the rules for determining whether or not a SIMPLE IRA has an Applicable Designated Beneficiary and the identity of the Applicable Designated Beneficiary for purposes of determining the RMD payout period and/or method (as described in Section (7)(b)) continue to apply under the new Post-Death RMD rules to the Beneficiaries of a SIMPLE IRA owner who died after December 31, 2019.

a. Single Beneficiary—Applicable Eligible Designated Beneficiary Determination. If there is only one Beneficiary of the SIMPLE IRA that is required to be taken into account under the rules described in paragraph (i) of Section (7)(b) and/or by operation of the separate account rules described in paragraph (iii)b of Section (7)(b), then it appears the following applies:

(i) If the Beneficiary is an individual who satisfies the definition of an Eligible Designation Beneficiary (as described above), it appears the SIMPLE IRA is treated as having an Applicable Eligible Designated Beneficiary for purposes of determining the RMD payout period and/or method and the Beneficiary shall be treated as the Applicable Eligible Designated Beneficiary. If the Applicable Eligible Designated Beneficiary is the SIMPLE IRA owner’s surviving spouse, it appears the surviving spouse will be considered the sole Applicable Eligible Designated Beneficiary of the SIMPLE IRA.

(ii) If the Beneficiary is an individual who does not satisfy the definition of an Eligible Designation Beneficiary, it appears the SIMPLE IRA is treated as having an Applicable Designated Beneficiary who is not an Applicable Eligible Designated Beneficiary for purposes of determining the RMD payout period and/or method.

(iii) If the Beneficiary is an entity (except for certain trusts, as described earlier), it appears the SIMPLE IRA is treated as having no Applicable Designated Beneficiary for purposes of determining the RMD payout period and/or method.

b. Multiple Beneficiaries—Applicable Eligible Designated Beneficiary Determination: In general, if there is more than one Beneficiary of the SIMPLE IRA that is required to be taken into account under the rules described in paragraph (i) of Section (7)(b), then, unless separate inherited SIMPLE IRAs are timely established for each Beneficiary in accordance with the separate account rules described in paragraph (iii)(b) of Section (7)(b), the following applies:

(i) If all the Beneficiaries required to be taken into account are individuals who satisfy the definition of an Eligible Designated Beneficiary, it appears the SIMPLE IRA is treated as having an Applicable Eligible Designated Beneficiary for purpose of determining the RMD payout period and/or method and the Beneficiary with the shortest life expectancy shall be treated as the Applicable Eligible Designated Beneficiary for purposes of applying the RMD rules. Note, however, even if the Beneficiary with the shortest life expectancy is the SIMPLE IRA owner’s surviving spouse, the surviving spouse will not be considered the sole Applicable Eligible Designated Beneficiary of the SIMPLE IRA.

(ii) If all the Beneficiaries required to be taken into account are individuals, but any one of the Beneficiaries does not satisfy the definition of an Eligible Designated Beneficiary, it appears the SIMPLE IRA is treated as having an Applicable Designated Beneficiary who is not an Applicable Eligible Designated Beneficiary for purpose of determining the RMD payout period.

(iii) If any of the Beneficiaries required to be taken into account is an entity (except for certain trusts, as described earlier), it appears the SIMPLE IRA is treated as having no Applicable Designated Beneficiary for purposes of determining the RMD payout period and/or method.

(iv) SIMPLE IRA Is Treated As Having No Applicable Designated Beneficiary:

a. SIMPLE IRA Owner Died Before RBD: If the SIMPLE IRA is treated as having no Applicable Designated Beneficiary and the SIMPLE IRA owner died before the RBD, the Beneficiary(ies) of the SIMPLE IRA are subject to the 5-year Rule.

b. SIMPLE IRA Owner Died On or After RBD: If the SIMPLE IRA is treated as having no Applicable Designated Beneficiary and the SIMPLE IRA owner died on or after the RBD, the Beneficiary(ies) of the SIMPLE IRA must take RMDs each DCY by December 31st of the DCY, starting with the DCY after the year of the SIMPLE IRA owner’s death (Note, as indicated above, the Beneficiary(ies) may need to take the undistributed portion of the RMD for the last year of the SIMPLE IRA owner’s life). The RMD amount for each DCY is calculated using the Deceased SIMPLE IRA Owner Life Expectancy Method.

(v) Applicable Designated Beneficiary Is Not an Applicable Eligible Designated Beneficiary. If the SIMPLE IRA is treated as having an Applicable Designated Beneficiary that does not qualify as an Applicable Eligible Designated Beneficiary, the Beneficiary(ies) of the SIMPLE IRA is subject to the 10-year Rule.

(vi) Applicable Eligible Designated Beneficiary Where the Surviving Spouse Is Not the Sole Applicable Eligible Designated Beneficiary:

a. If the SIMPLE IRA is treated as having an Applicable Eligible Designated Beneficiary, but the SIMPLE IRA owner’s surviving spouse is not considered the sole Applicable Eligible Designated Beneficiary of the SIMPLE IRA, the Beneficiary(ies) must take RMDs each DCY by December 31st of the DCY using the Non-spouse Life Expectancy Method, unless a Beneficiary elects to use the 10-year Rule. The first DCY for the Beneficiary is the first calendar year after the year of death.

b. Death of Beneficiary. If the Beneficiary dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary is subject to the 10-year Rule.

(vii) Applicable Eligible Designated Beneficiary Where the Surviving Spouse Is the Sole Applicable Eligible Designated Beneficiary:

a. If the SIMPLE IRA is treated as having an Applicable Eligible Designated Beneficiary and the SIMPLE IRA owner’s surviving spouse is considered the sole Applicable Eligible Designated Beneficiary of the SIMPLE IRA, the surviving spouse is not required to start taking RMDs until the later of December 31 of the (A) year after the year of the SIMPLE IRA owner’s death, or (B) the year in which the SIMPLE IRA owner would have attained RMD Age. Once the surviving spouse is required to start taking RMDs, the surviving must take RMDs each DCY by December 31st of the DCY using the Spousal Life Expectancy Method, unless the surviving spouse elects to use the 10-year Rule.

b. Death of Spousal Designated Beneficiary. If the surviving spouse is the sole Applicable Eligible Designated Beneficiary and dies before the SIMPLE IRA is exhausted, the Remainder Beneficiary is subject to the 10-year Rule.

c. Death of Surviving Spouse Before RMDs Begin. If the surviving spouse is the sole Applicable Eligible Designated Beneficiary and dies before December 31 of the year he or she must begin receiving RMDs, the surviving spouse will be treated as if he or she was the SIMPLE IRA owner for purposes of determining the RMD payout period and/or method applicable to the surviving spouse’s Beneficiary(ies). Note, however, if the surviving spouse has remarried, his or her new spouse may not use the special rules for surviving spouses set forth in this paragraph but is, instead, treated as a nonspouse Beneficiary of the decedent’s SIMPLE IRA.

d. Special Election to Treat Decedent’s SIMPLE IRA as Spouse’s Own SIMPLE IRA. If the SIMPLE IRA owner’s surviving spouse is considered the sole Applicable Eligible Designated Beneficiary and has an unlimited right of withdrawal from the SIMPLE IRA, the surviving spouse may elect to treat the SIMPLE IRA as the surviving spouse’s SIMPLE IRA. In general, the special election may be made at any time. This special election is automatically deemed to have been made if the surviving spouse either (A) fails to take the RMD for a year as a beneficiary of the SIMPLE IRA, or (B) makes any form of contribution to the SIMPLE IRA. Once this election is made, the SIMPLE IRA is treated as the Spouse’s SIMPLE IRA for all purposes including the RMD rules.

III. Special Features of your SIMPLE IRA

In addition to the statutory requirements described in Section II above, your SIMPLE IRA has the following special features:

1. Investment Direction/Other Information. You acknowledge and understand that we will not make any investment decisions with respect to your SIMPLE IRA, or otherwise act as an investment adviser, as defined under the Investment Adviser’s Act of 1940 (the “Advisers Act”) unless you enter into a separate written agreement with us or one of our affiliates which so provides. Absent such a separate written agreement, you shall direct us with respect to the investment of all contributions and the earnings therefrom. You acknowledge and understand that (a) when Morgan Stanley, its affiliates and its employees provide “investment advice” as defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or Code Section 4975 (collectively, the “Retirement Laws”) regarding an individual retirement account (“IRA”), a Roth IRA, a Coverdell education savings account, a plan covered by ERISA or a plan described in Section 4975(e)(1)(A) of the Code (collectively, “Retirement Account”), we are a “fiduciary” under the Retirement Laws; and (b) when we provide investment education, takes orders on an unsolicited basis or otherwise do not provide “investment advice”, we will not be considered a “fiduciary” under the Retirement Laws. For more information regarding our role with respect to a Retirement Account, please visit morganstanley.com/disclosures/dol. Investments may be made in publicly traded securities and such other investments that are available for acquisition in the normal course of our business and have been approved by us for SIMPLE IRA investments. We reserve the right to decline to follow any investment direction regardless of the nature of the security or other property involved in the proposed transaction. You acknowledge and agree that we are authorized without further direction from you to automatically invest any uninvested cash in deposit accounts with Morgan Stanley Bank, N.A., Morgan Stanley Private Bank, National Association, any other banking affiliate of the Custodian or, under certain circumstances, certain third party banks, or in any other sweep investment vehicle either specified in an agreement applicable to your SIMPLE IRA or otherwise made available to your SIMPLE IRA and disclosed to you, as further described in the Summary of the Bank Deposit Program and the Bank Deposit Program Disclosure Statement applicable to your SIMPLE IRA. You further acknowledge and agree that any uninvested cash held in your SIMPLE IRA may be deposited or invested, as directed by you (or an authorized party), in deposit accounts with Morgan Stanley Bank, N.A. or Morgan Stanley Private Bank, National Association or any other banking affiliate of Morgan Stanley in connection with any savings deposit program offered by Morgan Stanley (“Savings Program”) and as further described in the disclosure statement for such Savings Program.

2. Unrelated Business Taxable Income (“UBTI”). The income earned in your IRA is generally exempt from federal and state income taxes and will not be taxed until distributed to you, unless you make an investment that results in “unrelated business taxable income” (“UBTI”), as defined under the Code and applicable state tax law. UBTI can result, for example, from an investment in a limited partnership that is debt-financed or that actively conducts a trade or business. If your IRA derives UBTI for any year, then an unrelated business income tax will generally be due (Note: an IRS Form 990-T, Exempt Organization Business Income Tax Return, must be filed in any year for which the gross unrelated business income exceeds $1,000, regardless of whether any unrelated business income tax is due). You understand and agree that:

(a) You are obligated to notify us if an investment in your IRA generates UBTI (including, but not limited to, the name of the investment and the amount of the UBTI). 

(b) You hereby authorize and direct us to make such filings and pay taxes with respect to UBTI as we deem appropriate (with the information received by or made available to us from you or other sources), and to liquidate assets of your IRA to pay any such taxes as it is an expense of your IRA and must be paid from the assets of your IRA. 

(c) To the extent we prepare any related filings (e.g., Form 990-T), we reserve the right to charge you or your IRA for the cost of such preparation, and for any penalties, interest, losses, or expenses relating to such taxes and filings. 

(d) We will not make any estimated tax payments on behalf of your IRA, unless you instruct us to make such estimated tax payments in writing in a manner acceptable to us.

(e) You agree to indemnify us from any claims that arise regarding UBTI.

3. Beneficiaries.

(a) Who May Be a Beneficiary. You are entitled to designate one or more individuals or a trust or other organization as a primary and a contingent Beneficiary of your SIMPLE IRA. If you are married and your spouse has a community property interest in your SIMPLE IRA, you may need the written consent of your spouse to designate someone other than your spouse as the beneficiary of your SIMPLE IRA. You understand and acknowledge that, pursuant to the SIMPLE IRA document, upon your death your interest in the SIMPLE IRA shall become the property of the primary, contingent or default Beneficiary(ies), as applicable. Accordingly, after you die, your primary Beneficiary will receive your Plan benefits if they survive you. If your primary Beneficiary dies before you do, we will pay your Plan benefits, if any, to your contingent Beneficiary if they survive you. If you do not designate a Beneficiary, or if your primary Beneficiary and your contingent Beneficiary, if any, die before you, we will pay your SIMPLE IRA balance in accordance with Section 1.2 of the SIMPLE IRA document. In general, these default beneficiary designations are as follows: to your surviving spouse; if no surviving spouse, to your surviving children (naturally born or legally adopted) in equal shares; if no surviving spouse or surviving children, to your surviving parents in equal shares; if no surviving parents, then to your estate.

(b) Designating and Changing Beneficiaries. You may designate a Beneficiary in the SIMPLE IRA Application and may change your Beneficiary at any time by giving written notice to us in a manner acceptable to us. We will act upon the last dated, written designation received by us in acceptable form prior to your death. We urge you to review and renew your Beneficiary designation whenever your family circumstances are changed by a life cycle event such as marriage, divorce, birth, adoption or death (in addition to reviewing the designation when making a will or establishing a trust) to assure that we distribute your SIMPLE IRA as you intend.

(c) Disclaimers. Your Beneficiary may elect to disclaim all or part of an interest in your SIMPLE IRA and, if they do, subject to the tax rules governing minimum distributions, we will pay your SIMPLE IRA as if the disclaiming Beneficiary died before you did.

(d) Divorce. If you designate your spouse as a Beneficiary, your designation will be automatically cancelled under the terms of your SIMPLE IRA document upon the dissolution of your marriage by divorce, annulment or other legal process. If you want to continue to designate your ex-spouse as Beneficiary, you must submit a new designation to us in acceptable form, dated and received by us after the date of the dissolution of your marriage.

(e) Application of Default Beneficiary Provisions – Special Circumstances. If the sole Beneficiary of your SIMPLE IRA does not designate a Beneficiary before his or her death, a Beneficiary will be designated under the default beneficiary rules provided in Section 1.2 of the SIMPLE IRA document.

(f) Remainder Beneficiary. Your Beneficiary may, after your death, name an individual, trust, estate or other entity to receive distributions of the Beneficiary’s share of your SIMPLE IRA after the death of your Beneficiary. Any individual or entity so designated will, upon the death of your Beneficiary, become the Beneficiary for all purposes except for minimum required distributions described in Section II(6) and (7) above. In the event a remainder beneficiary that is a natural person dies after receiving benefits, amounts will be payable to his/her estate in a lump sum payment.

4. Other Information.

(a) Earnings. The earnings of each separate SIMPLE IRA shall be allocated only to that SIMPLE IRA.

(b) Growth In Value. Increase in value of your SIMPLE IRA will depend entirely on the investment decisions made by you or on your behalf and is neither guaranteed nor protected by Morgan Stanley or its affiliates.

5. Internal Revenue Service Approval. The E*TRADE from Morgan Stanley SIMPLE IRA has been approved by the IRS as to the form of the SIMPLE IRA document only, and does not represent any endorsement or determination of the merits of opening such SIMPLE IRA at Morgan Stanley.

IV. Federal Income Taxation of Your SIMPLE IRA

1. Contributions.

(a) Employee Elective Deferrals. If you are eligible to participate in your employer’s SIMPLE IRA Plan, you may direct your employer to deduct a percentage (specified by you) of your compensation and make a contribution of an equal amount to your SIMPLE IRA. These contributions are known as “elective deferrals.” To determine if you are eligible, please refer to the Plan Summary and annual Notice to Employees, provided by your employer, describing your employer’s SIMPLE IRA Plan.

Your employer must contribute your elective deferrals to your SIMPLE IRA no later than 30 days after the end of the month in which deductions were made from your paychecks.

Elective deferrals are excluded from your Federal taxable income for the year in which they are made. In other words, elective deferrals are deducted from your compensation before your employer calculates your Federal income tax withholding. However, your elective deferrals are included in your compensation for purposes of calculating social security and Medicare taxes. This means that participating in your employer’s SIMPLE IRA Plan will not reduce your social security benefits or affect your eligibility for Medicare. You will not be subject to Federal income taxes on your elective deferrals and any investment earnings in your SIMPLE IRA until you or your Beneficiary receive a distribution from your SIMPLEIRA. Please read “Taxation of Distributions” at (B) below.

(i) Saver’s Credit. The Saver's Credit is a nonrefundable tax credit available to taxpayers whose adjusted gross income, as defined for purposes of the Saver’s Credit under Section 45B of the Code does not exceed certain limits. The credit is equal to a specified percentage of the taxpayer’s eligible contributions to IRAs or certain employer-sponsored retirement plans for the taxable year.

(a) Eligibility. The taxpayer must be age 18 or over before the end of the taxable year, may not be a full-time student and cannot be claimed as a dependent on another taxpayer’s Federal income tax return.

(b) Contributions Eligible for the Saver’s Credit. The maximum amount of annual contributions that may be taken into account is $2,000 ($4,000 if married filing jointly). Eligible contributions include annual contributions to Traditional and Roth IRAs and salary reduction contributions to 401(k), SIMPLE (IRA or 401(k)), 403(b), governmental 457 or SAR-SEP plans. Voluntary after-tax contributions to an employer’s qualified retirement plan or a 403(b) plan are also eligible for the credit.

(c) Reduction of Eligible Contributions. The amount of a taxpayer’s eligible contributions for any taxable year generally will be reduced by any taxable distributions received by the taxpayer (or by the taxpayer’s spouse if filing a joint return) from an IRA or a plan listed in (B) above during the taxable year, during the two preceding years or during the period from the end of the taxable year until the due date (with extensions) of the taxpayer’s Federal income tax return.

(d) Amount of Credit. The Saver’s Credit will be 50%, 20% or 10% (the “Applicable Percentage”) of eligible contributions based upon the taxpayer’s filing status and adjusted gross income. For this purpose, you should not exclude from your adjusted gross income amounts otherwise excluded or deducted from your income as foreign earned income, foreign housing costs, income for bona fide residents of American Samoa, or income from Puerto Rico. Please consult your tax advisor on the extent to which the Saver’s Credit may be relevant for you given your personal tax situation.

(b) Employer Contributions. If you make elective deferrals during a year, your employer must make matching contributions of an amount equal to the lesser of your elective deferrals or 3% of your compensation. Your employer, for any two years out of five consecutive years, may elect a lower match percentage but not less than 1%. As an alternative to a matching contribution, your employer, for any year, may elect to make a nonelective contribution equal to 2% of your compensation (if you are an eligible employee) regard- less of whether you have made elective deferrals. Your employer may require you to actually earn up to $5,000 in compensation to qualify for a nonelective contribution. For purposes only of the 2% nonelective contribution, your compensation taken into consideration may not exceed $200,000 (subject to cost-of-living adjustments by the U.S. Department of the Treasury; this is $330,000 for 2023).

Your Employer must tell you, in writing, before the start of each year, how it will determine its contributions for the year. Employer contributions must be made to your SIMPLE IRA no later than the due date (with extensions) of your employer’s Federal income tax return for your employer’s taxable year with or within which the year for which contributions are to be made ends.

In the year for which they are made, employer contributions are excluded from your taxable income and are not used to calculate social security or Medicare taxes. You will not be subject to Federal income taxes on employer contributions and any investment earnings on such contributions until the year you or your Beneficiary receives a distribution from your SIMPLE IRA. Please read “Taxation of Distributions” at (2) below.

(c) Rollover Contributions You may roll over eligible amounts from certain retirement plans (including Traditional IRAs, 401(k) plans, 403(b) annuities, and governmental 457(b) plans) to a SIMPLE IRA, but only after the end of the two-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by the same employer. Before the end of the two-year period, you may only contribute distributions from another SIMPLE retirement account to your SIMPLE IRA within 60 days after you receive the distribution from such other SIMPLE IRA. These contributions are referred to as “rollover contributions.” In general, if you make a tax-free rollover of any part of a distribution (“first distribution”) from an IRA (including a SIMPLE IRA) to the same or another IRA, you cannot make another tax-free rollover to an IRA of any later IRA distributions you receive during the 12-month period beginning on the date you received the first distribution. This 12-month rule does not apply to (a) rollovers from or to eligible retirement plans (other than IRA based plans), (b) rollovers or conversions from a non-Roth IRA (i.e., traditional, SEP or SIMPLE IRA) to a Roth IRA, (c) rollovers of distributions which fail to be Qualified First-time Homebuyer Distributions solely by reason of the delay or cancellation of the purchase or constructions of a principal Residence, or (d) IRA recharacterizations. Direct transfers of SIMPLE retirement account assets between trustees or custodians are not considered to be distributions and, therefore, are neither currently taxable to you nor counted against your annual limit on rollovers. You may not, however, roll over any minimum required distribution (described in Section II(6) above) or any deemed distribution (described in Section IV(2)(c) below).

A rollover contribution is not deductible from your income. Taxation of amounts rolled over is deferred until the year you or your Beneficiary receive the rolled over amount as part of a distribution from your SIMPLE IRA.

(d) The provisions of your SIMPLE IRA, including those relating to exclusions from income, are applied without regard to state community property laws except that such laws may limit your ability to designate a nonspouse beneficiary.

2. Taxation of Distributions.

(a) In General. You must include all amounts distributed or deemed distributed to you from your SIMPLE IRA in your taxable income for the year of the distribution, except to the extent the distribution is treated as a return of the after-tax amounts in your non-Roth IRAs. If you ever made nondeductible traditional IRA contributions or rolled over after-tax amounts from an eligible retirement plan to any of your non-Roth IRAs (i.e., Traditional, SEP, and SIMPLE IRAs), then distributions from any of your non-Roth IRAs are generally treated as consisting partly of the after-tax amounts (nontaxable) and partly of the pretax amounts (taxable) in your non-Roth IRAs until the after-tax amounts have been fully distributed from your non-Roth IRAs (see IRS Form 8606 for more information). No special tax treatment (i.e., forward averaging or capital gains) is available for distributions from your SIMPLE IRA. Taxation of your SIMPLE IRA distribution, except for minimum required distributions (see paragraph II(6) above), and “deemed distributions” (see subparagraph (c) below), may be deferred by rolling over the distribution into another SIMPLE IRA (subject to the 12-month rule described earlier) or, if more than two years have passed since you first participated in your employer’s SIMPLE IRA Plan, to a Traditional IRA (subject to the 12-month rule described earlier) or other eligible retirement plan. After the two-year period just described, you may roll over or convert your SIMPLE IRA to a Roth IRA. All amounts rolled over or converted to a Roth IRA will be taxable income, except to the extent the amount consists of the after-tax amount in your non-Roth IRAs, calculated in accordance with the usual IRA distribution tax rules (see IRS Form 8606 for more information). The taxable conversion amount must be included in gross income for the year in which the distribution takes place even if, within 60 days, you complete a rollover contribution or a conversion to a Roth IRA in the same or next year. The 10% premature penalty tax does not apply to the taxable conversion amount, unless the taxable conversion amount is withdrawn from the Roth IRA within the 5-tax-year period for that particular conversion contribution. Your surviving spouse (but no other Beneficiary) may also roll over your SIMPLE IRA to your surviving spouse’s Traditional IRA or other eligible retirement plan (and defer income taxes until your spouse’s Traditional IRA or other eligible retirement plan is distributed) or to a Roth IRA (including the taxable portion of the distribution in your spouse’s taxable income in the year the rollover distribution takes place, except to the extent the amount consists of after-tax amounts). You may also choose to roll over a portion of your distribution and pay income taxes on the taxable portion that is not rolled over.

(b) Recharacterization of Rollover Contributions. A Roth IRA Conversion cannot be recharacterized effective January 1, 2018. You (or your executor, administrator or other personal representative of your estate) may recharacterize a failed rollover contribution to your SIMPLE IRA (the “First IRA”) by transferring the amount contributed with any allocable earnings to a Traditional IRA (the “Second IRA”). You must give notice to the trustee or custodian of both the First and Second IRA that you want to transfer and recharacterize your rollover contribution no later than the due date, with extensions, of your Federal income tax return for the tax year. A contribution that is recharacterized is treated as having been originally contributed to the Second IRA on the same date as the original contribution to the First IRA. The recharacterized contribution is reported to the IRS and is treated as a contribution to the Second IRA. The recharacterization is accomplished by directly transferring the amount being recharacterized (in cash or in kind), adjusted for net gains or net losses, from the First IRA to the Second IRA.

Amounts contributed to the First IRA in a tax-free transfer or rollover may not be recharacterized, except for amounts erroneously rolled over or transferred from a Traditional IRA to a SIMPLE IRA. Additionally, employer contributions, including employee elective deferrals to a SEP, SAR-SEP or SIMPLE IRA, may not be recharacterized. The 12-month rule for IRA-to-IRA rollovers does not apply to a recharacterized contribution.

If a contribution is not properly recharacterized, it will be treated as a current year annual IRA contribution and, to the extent the annual contribution limit is exceeded, as a current year excess contribution subject to the 6% penalty excise tax (see IV(6)(c) below).

(c) Deemed Distributions.

(i) The Code Defines Certain Transactions as “Prohibited Transactions.” You (or upon your death or certain other circumstances, your Beneficiary) are generally considered to be a “fiduciary” of your SIMPLE IRA because of your ability to direct the investment and transactions within your SIMPLE IRA. If you or your Beneficiary engage in a prohibited transaction (as defined in Code Section 4975(c)) with respect to your SIMPLE IRA, as a fiduciary of such SIMPLE IRA, the SIMPLE IRA will become immediately taxable under Code Section 408(e)(2)(A) on the first day of the taxable year in which the prohibited transaction occurs, and your IRA will be treated as having been distributed on such day. The taxable portion of your SIMPLE IRA as of that day will be included in your income for that taxable year and your account will cease to be treated as an IRA going forward (which means you will be subject to annual taxation on the realized income generated in the account). A 10% penalty tax will be imposed on the amounts included in gross income as a result of the deemed distribution if you have not yet attained age 59½ (25% if the amount is treated as distributed during the two-year period beginning on the date you first participated in the SIMPLE Plan), and no exemption to the penalty tax applies. In general, a “prohibited transaction” means any direct or indirect (1) sale or exchange, or leasing, of any property between a disqualified person and the IRA; (2) lending of money or other extension of credit between a disqualified person and the IRA; (3) furnishing of goods, services or facilities between a disqualified person and the IRA; (4) transfer to or use by or for the benefit of a disqualified person of the income or assets of the IRA; (5) dealing by the disqualified person who is a fiduciary with the assets of the IRA in his own interest for his own account; or (6) receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the IRA in connection with a transaction involving the income or assets of the IRA. For this purpose, “disqualified person” means generally the individual for whom the IRA is maintained, such individual’s family members, and any person or entity from which the IRA participant derives a personal benefit, or a business or other entity (such as a trust) in which you have a 50% or greater interest, or, if your employer contributes to your IRA, between the IRA and your employer or an owner of your employer.

Examples of prohibited transactions are: borrowing from your IRA; engaging in a cross trade between your non-IRA brokerage account and your IRA; investing IRA assets in a residence for personal use (present or future); selling or leasing property to your IRA; or buying or leasing property from your IRA.

(ii) Pledging SIMPLE IRA Assets — Tax Treatment. If you use all or any portion of a SIMPLE IRA as security for a loan, then the portion so used is treated as distributed to you and, to the extent such portion is attributable to deductible contributions and earnings, will be included in your income for the taxable year during which you so use the SIMPLE IRA. Further, you may be subject to a 10% penalty tax on the amount pledged if you pledge your IRA before you attain age 59½ (25% if the amount is treated as distributed during the two-year period beginning on the date you first participated in the SIMPLE Plan).

(iii) Collectibles Purchased in the Account. If you use SIMPLE IRA assets to acquire “collectibles” such as artworks, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages or any other tangible personal property classified by the Department of the Treasury as a collectible within the meaning of Code Section 408(m), the assets so used will be treated as having been distributed to you in an amount equal to the cost of the collectibles. There is a limited exception to this rule for certain coins and bullion.

(d) Federal Income Tax Withholding. In general, Federal income tax will be withheld at the rate of 10% from your distribution unless you (or your Beneficiary) elect(s), on a form acceptable to us, not to have such amount withheld or to have a different amount with- held. Distributions made to you or your Beneficiary, as applicable, at an address outside of the United States or its possessions are subjected to withholding.

(e) Tax-Free Qualified Charitable Distributions (QCD). Provided the SIMPLE IRA is not ongoing, SIMPLE IRA owners (or beneficiaries after the death of the owner) who are age 70½ or older may make qualified charitable distributions of up to $100,000 per year directly from their IRAs to an eligible organization without incurring any adverse federal income tax consequences. A SIMPLE IRA is considered ongoing if the employer made a contribution for the year in which the QCD would be made. The distribution counts toward meeting any Required Minimum Distribution (RMD), but is not included in calculating the individual taxpayer’s limitation on charitable deductions in the year the donation was made.

3. Federal Penalty Taxes. The Code imposes certain penalty taxes on your SIMPLE IRA or a distribution from your SIMPLE IRA upon the occurrence of certain events. These taxes are as follows:

(a) Penalty Tax on Premature Distributions. Penalty tax of an amount equal to 10% of the taxable portion of your IRA distribution (or deemed distribution) is imposed if your distribution is made before you attain age 59½, unless it is made:

(i) on account of your death;

(ii) after you become Disabled (as defined later);

(iii) as part of a scheduled series of substantially equal periodic payments made at least annually until the later of five years or your attaining age 59½ calculated using the life expectancy of you alone or jointly with your Beneficiary;

(iv) is rolled over to another SIMPLE IRA (or an IRA or other eligible retirement plan if distributed at least two years after you first participated in your employer’s plan) within 60 days after you receive the distribution;

(v) as a Qualified First-time Homebuyer Distribution but not in excess of a $10,000 lifetime limit;

(vi) for Qualified Higher Education Expenses;

(vii) for Qualified Medical expenses in excess of 7.5% of your adjusted gross income;

(viii) to you after separation from employment (or within 60 days of re-employment) in the same or next succeeding taxable year after you have received (or would have received but for your self-employment) Federal or state unemployment compensation for at least 12 consecutive weeks as a result of such unemployment provided the IRA distribution is used to pay premiums for health care coverage during such period of unemployment;

(ix) as a transfer of an interest in your IRA under a court order of divorce or separate maintenance;

(x) as a Qualified Reservist Distribution;

(xi) as a Qualified Disaster Distribution; or

(xii) as a Qualified Birth or Adoption Distribution.

If the distribution is made within two years of the date you first began participating in your employer’s SIMPLE IRA Plan, the applicable penalty tax rate is increased from 10% to 25%.

(b) 50% Tax on Excess Accumulations. If you (or your beneficiary after your death) do not receive the minimum required distribution described in paragraph II(6) and (7) above, a 50% excise tax is imposed on the amount representing the difference between the minimum required distribution amount for the tax year in question and the amount, if any, distributed to you or, if applicable, your beneficiary during the calendar year.

(c) 6% Tax on Excess Contributions. A 6% penalty tax is imposed on contributions greater than the limits described in paragraphs IV(1)(a) and (b) and rollover contributions which do not qualify for tax-free treatment under paragraph IV(1)(c) unless the excess contributions are withdrawn as discussed below. In general, the 6% penalty tax is assessed for each year until the excess is with- drawn or until you eliminate the excess by contributing less than the maximum allowable amounts in future years.

The 6% penalty tax will not be imposed if the excess contribution and any related earnings are withdrawn from your SIMPLE IRA no later than the due date of your Federal income tax return (including extensions) and you include both the excess contribution and any earnings on it in your gross income for the year in which you made the excess contribution. You are responsible for computing the amount of the excess contribution and advising us of the amount. The earnings must be calculated under Income Tax Regulations Section 1.408-4. You should consult your tax advisor with respect to calculating the amount to be withdrawn.

If you withdraw the excess contribution after your Federal income tax return is due (including extensions), you do not claim a deduction for the excess amount and your aggregate contributions did not exceed applicable limits, the 6% penalty tax will still be due but the withdrawal will not be treated as a taxable distribution in the year it is taken. On the other hand, if your aggregate contributions exceeded applicable limits and you withdraw the excess after your Federal income tax return due date, you will owe the 6% penalty tax and you must include the withdrawn amount in your taxable income for the year of the withdrawal   in accordance with the normal tax distribution rules for IRAs. Such withdrawals are subject to the 10% (or 25%) penalty tax on premature distributions unless you have reached age 59½ or another exception applies.

(d) Reports to the Internal Revenue Service. You must file IRS Form 5329 (Return for Individual Retirement Savings Arrangements) with your Federal income tax return for any year for which you are liable for any of the penalty taxes described above.

5. Additional Information. You may obtain further information about the Federal income taxation of SIMPLE IRAs from any district office of the Internal Revenue Service, or from the IRS website, irs.gov. You may want to review IRS Publications 590-A (Contributions to Individual Retirement Arrangements) and 590-B (Distributions from Individual Retirement Arrangements). 

V. State Tax Rules

Some states and localities may have tax rules differing from the Federal rules with respect to SIMPLE IRA accounts. You should consult your tax advisor in this regard.

VI. Federal Estate and Gift Tax Rules

Amounts held in your E*TRADE from Morgan Stanley SIMPLE IRA(s) are includible in your gross estate for Federal estate tax purposes (although IRA assets for which a non-estate Beneficiary is selected are not generally considered to be probate assets in most state jurisdictions). Furthermore, post-death distributions to your Beneficiary may constitute income in respect of a decedent for income tax purposes. For further information about how your SIMPLE IRA account may fit in with your estate, consult your estate or tax advisor.

VII. Self-Directed Account Agreement and Arbitration

The brokerage account components of your SIMPLE IRA are subject to the terms and conditions contained in the Self-Directed Account Agreement, which include, among other requirements a pre-dispute arbitration provision. Any claims or controversies are subject to an arbitration clause as set forth in the Self-Directed Account Agreement.

VIII. Definitions

Any capitalized term used in this Disclosure Statement that is not defined in the text when the term first appears shall have the meaning set forth below. Any capitalized term used but not defined in this Disclosure Statement shall have the meaning given to it in Article I of the Morgan Stanley SIMPLE IRA document.

1. “Adjusted Gross Income” or “AGI” is your total income less certain deductions as shown on your Federal income tax return, but modified under Code Section 219(g)(3)(A), by adding in certain otherwise excludible income and deductions such as foreign earned income, adoption assistance or expenses, income from U.S. Savings Bonds used to pay Qualified Higher Education Expenses, student loan interest and deductible Traditional IRA contributions. AGI is used to determine your ability to deduct Traditional IRA contributions.

2. “Modified Adjusted Gross Income” or “MAGI” is your AGI but does not include a taxable conversion amount. MAGI is used to determine your eligibility to contribute to a Roth IRA.

3. “Disabled” shall mean you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or be of long-continued and indefinite duration. Under Code Section 72(m)(7) you must, if requested by the IRS, be able to furnish proof of your disability in a form and manner acceptable to the IRS.

4. “Qualified First-Time Homebuyer Distribution” shall mean any distribution used, within 120 days of the date the distribution is received, to pay for the acquisition, construction or reconstruction of the principal residence of the Participant, Participant’s spouse or the child, grandchild or ancestor of the Participant or Participant’s spouse, provided that the individual for whom the principal residence is acquired or constructed (and the individual’s spouse) had no present ownership interest in a principal residence during the two-year period ending on the date a binding contract to acquire the principal residence was entered into or on which construction or reconstruction of the principal residence commenced. The aggregate amount of distributions received by the Participant during the Participant’s lifetime which may be treated as Qualified First-time Homebuyer Distributions may not exceed $10,000.

5. “Qualified Higher Education Expenses” shall mean tuition, fees, books, supplies and equipment required for, and expenses for special needs services incurred in connection with, the enrollment or attendance of the Participant, the Participant’s spouse or the child (as defined in Code Section 152(f)(1)) or grandchild of the Participant or Participant’s spouse, at an eligible educational institution (as defined in Code Section 529(e)(5)) reduced, for any taxable year, by any amount paid for the benefit of the student consisting of a qualified scholarship, qualified educational assistance allowance or similar payment or qualified distributions from a qualified tuition program or an Education Savings Account which is excludible from gross income under the Code or any other Federal law. Qualified Higher Education Expenses also include room and board for students who are at least half-time up to the greater of the educational institution’s allowance for room and board in its cost of attendance (as described in Section 472 of the Higher Education Act) or the amount actually charged for room and board to a student residing in the institution’s housing.

6. “Qualified Medical Expenses” shall mean any amount paid for medical care (as defined in Code Section 213(d)) which you would be allowed to treat as a deductible medical expense if you itemized your deductions for that year. For purposes of exempting a distribution from the 10% premature distribution penalty tax, it is not required that you actually itemize your deductions for the relevant year.

7. “Qualified Disaster Distributions” shall mean a distribution made from an IRA to an individual whose main home was in a qualified disaster area at any time during that disaster’s incident period and who sustained an economic loss because of the disaster. The total of an individual’s Qualified Disaster Distributions from all IRAs and employer plans is limited to $100,000 per disaster.

8. “Qualified Reservist Distribution” shall mean a distribution made from an IRA to a member of a reserve component ordered or called to active duty after September 11, 2001, if certain requirements are met. Under Code Section 72(t)(2)(G), the individual must be ordered or called to active duty for a period in excess of 179 days or for an indefinite period. In addition, the distribution must be made during the period beginning on the date of such order or call and ending at the close of the active duty period.

9. “Qualified Birth or Adoption Distribution” shall mean a distribution of not more than $5,000 made during the one-year period beginning on the date on which a child is born or which the adoption is finalized. Eligible adoptees must be under the age of 18 (unless physically or mentally incapable of self-support) and cannot be the child of the participant or IRA owner’s spouse.

IX. Additional Financial Information

(A) Account and Other Fees

A Fee Schedule is provided in Section X of this Disclosure Statement.

(B) Certain Compensation Earned by Morgan Stanley and its Affiliates

(1) Float. You understand and agree that Morgan Stanley may retain, as compensation for the performance of services, your Account’s proportionate share of any interest earned on aggregate cash balances held by Morgan Stanley with respect to “assets awaiting investment or other processing.” This amount, known as “float,” is earned by us through investment in overnight cash deposits and highly liquid securities (e.g., U.S. government obligations), with the amount of such earnings retained by us, due to the short-term nature of the investments, being generally at the prevailing overnight interest rate applicable to these investments. This rate averaged approximately four basis points during the 12 months ended December 31, 2021, but please note that due to market fluctuations the rate will change – please contact us for more current information. “Assets awaiting investment or other processing” for these purposes includes, to the degree applicable: (i) new deposits to the Account, including interest and dividends; (ii) any uninvested assets held by the Account caused by an instruction to purchase or sell securities (which may, after the period described below, be automatically swept into a sweep vehicle); (iii) assets held in the Plan Account (where applicable); and (iv) withdrawals from the Account, to the degree check-writing privileges may be offered to the SIMPLE IRA. With respect to assets awaiting investment or other processing: (i) where such assets are received by Morgan Stanley on a day on which the New York Stock Exchange and/or the Federal Reserve Banks are open (“Business Day”), float shall generally be earned by us through the end of that Business Day (known as the “Sweep Date”), with the client credited interest/dividends in such funds as of the next Business Day following the Sweep Date; or (ii) where such assets are received on a Business Day that is not followed by another Business Day, or on a day which is not a Business Day, float shall generally be earned by us through the end of the next Business Day. Delays in providing investment instruction could result in increased compensation in the form of float. Please note, however, that uninvested cash typically does not await sweep for more than one day and Morgan Stanley does not invest, and therefore does not earn interest on, all uninvested client cash. Where Morgan Stanley facilitates a distribution from the Account, Morgan Stanley earns float on money set aside for payment of outstanding but uncashed checks, generally from the date on the face of the checks until the date that either the recipient cashes the check or the check is cancelled and the underlying funds are returned to the Account.

For example: If $10,000 is deposited into a Morgan Stanley Account and those funds are awaiting investment (i.e., the funds are not swept into the Morgan Stanley Bank Deposit Program, a money market fund or otherwise invested), Morgan Stanley may earn interest or “float” on the funds (as further described above). Assuming the interest rate is 0.04% Morgan Stanley would earn approximately 1 cents per day ($10,000 * 0.04% / 360 = $0.01).

(2) Payment for Order Flow and Other Routing Arrangements and Use of Electronic Communication Networks and Alternative Trading Systems.

Morgan Stanley is committed to providing the best execution for customers’ orders. In furtherance of this commitment, Morgan Stanley considers several factors, including price, the available liquidity pool, execution speed, transaction costs, service and opportunities for price improvement in determining where to route customer orders for execution.

Industry regulations require that we disclose whether we receive compensation for directing client orders for execution to various dealers, national securities exchanges, alternative trading systems (“ATSs”), including electronic communications networks (“ECNs”), and other market centers. This compensation is commonly referred to as “payment for order flow.”

Morgan Stanley, either directly or indirectly, may route customer equity orders to national securities exchanges, ATSs, including ECNs, and other market centers, including its affiliate Morgan Stanley & Co. LLC (“Morgan Stanley & Co.”). Certain market centers offer cash credits for orders that provide liquidity to their books and charge explicit fees for orders that extract liquidity from their books (and certain market centers invert this practice). From time to time, the amount of credits that Morgan Stanley receives from one or more such market centers may exceed the amount Morgan Stanley is charged. Morgan Stanley receives the benefit of these credits, either directly or indirectly, and such payments constitute payment for order flow. Morgan Stanley may also receive incremental pricing benefits from exchanges and/or ECNs if certain volume thresholds are met.

In addition, Morgan Stanley & Co. may route certain customer orders (including orders for fixed income securities, preferred shares and convertible bonds) to Morgan Stanley & Co. on behalf of Morgan Stanley. These arrangements between Morgan Stanley & Co. and Morgan Stanley are intended to facilitate trade execution for our customers, with apportionment of resulting expenses and revenue from the trading activity between Morgan Stanley and Morgan Stanley & Co. Morgan Stanley & Co. participates in Exchange-sponsored listed option payment for order flow programs and accepts payment for order flow for certain listed option orders. In the course of providing liquidity, Morgan Stanley & Co. may preference certain option orders to Morgan Stanley & Co.’s options market maker, or third-party market makers for execution.

Morgan Stanley and/or its affiliates have ownership interests in and/or Board seats on ECNs or other ATSs. In certain instances, Morgan Stanley and/or its affiliates may be deemed to control one or more of such ECNs or ATSs based on the level of such ownership interests and whether Morgan Stanley and/or its affiliates are represented on the Board of such ECNs or ATSs. Morgan Stanley and/or its affiliates may from time to time, directly or indirectly, effect client trades through ECNs or other ATSs in which Morgan Stanley and/ or its affiliates have or may acquire an interest or Board seat, and Morgan Stanley and/or its affiliates may thereby receive an indirect economic benefit based upon their ownership in the ECNs or other ATSs. Morgan Stanley and/or its affiliates will, directly or indirectly, execute through an ECN or other ATS in which it has an interest only in situations where Morgan Stanley and/or its affiliates, or the broker-dealer through whom they are accessing the ECN or ATS, reasonably believes such transaction will be in the best interest of its clients and the requirements of applicable law have been satisfied.

As noted above, Morgan Stanley, subject at all times to its obligations to obtain best execution for its customers’ orders, will route certain customer order flow to Morgan Stanley & Co. Furthermore, as of February 2021, Morgan Stanley and/or its affiliates own an interest in certain ECNs or ATSs, including: (i) National Stock Exchange of India; (ii) Miami International Holdings Inc.; (iii) Equilend; (iv) Euroclear Holding SA/NV; (v) LCH Group Holdings Limited (Clearing); (vi) Turquoise Global Holdings LTD; (vii) CME; (viii) ICE US Holding Company, LP; (ix) OTCDeriv Limited; (x) TIFFE– Tokyo Financial Futures Exchange; (xi) iSWAP Limited; (xii) EOS Precious Metals Limited; (xiii) Creditderiv Limited; (xiv) FXGlobalClear; (xv) Japan Securities Clearing Corporation; (xvi) CME/CBOT/NYMEX; (xvii) Dubai Mercantile Exchange; (xviii) Intercontinental Exchange; (xix) Bombay Stock Exchange; (xx) Japan Securities Depository Center Inc.; (xxi) MEMX Holdings LLC; (xxii) LCH. Clearnet Group LTD;  (xxiii) The Depository Trust and Clearing Corporation; and (xxiv) Copeland Markets LLC.

You understand and acknowledge that Morgan Stanley may effect trades on behalf of client accounts through ECNs, ATSs and similar execution systems and trading venues (collectively, “Trading Systems”), including Trading Systems in which Morgan Stan- ley and/or its affiliates may have a direct or indirect ownership interest. In addition, you understand and agree that, subject at all times to its obligations to obtain best execution for its customers’ orders, Morgan Stanley will route certain customer order flow  to its affiliates, and that, Morgan Stanley and/or its affiliates own an interest in certain ECNs or ATSs as listed above. The ECNs and ATSs on which Morgan Stanley trades for client accounts and in which Morgan Stanley and/or its affiliates own interests may change from time to time. You may contact Morgan Stanley for an up-to-date list of ECNs and ATSs in which Morgan Stanley and/or its affiliates own interests. You hereby authorize Morgan Stanley to effect trades on behalf of your account(s) through all such Trading Systems, affiliated and unaffiliated, and all such other Trading Systems through which Morgan Stanley may determine to trade in the future. You further acknowledge that the SIMPLE IRA Application, along with this Disclosure Statement, shall constitute the requisite authorization and notice of Morgan Stanley’s intent to trade through all such Trading Systems, pursuant to ERISA Section 408(b)(16) and/or Code Section 4975(d)(19).

Notwithstanding the foregoing, Morgan Stanley regularly and rigorously monitors the quality of the executions provided by all market centers to which customer orders are routed to ensure those market centers are providing the best execution reasonably available under the circumstances.

Additional information regarding these disclosures will be provided upon written request and certain order routing information is available online at morganstanley.com/wealth-disclosures/disclosures.

On request of a customer, Morgan Stanley will disclose to such customer the identity of the venue to which such customer’s orders were routed for execution in the six months prior to the request, whether the orders were directed orders or non-directed orders, and the time of the transactions, if any, that resulted from such orders as well as other customer specific order routing and execution information that is required by SEC Rule 606(b)(3).

X. SIMPLE IRA Fee Schedule

This Fee Schedule is part of the Morgan Stanley SIMPLE IRA document, but may be supplemented or changed upon notification to the Participant in accordance with Article X of the SIMPLE IRA document.

(A) Fees and Other Costs:

Your SIMPLE IRA is subject to certain account, service and transaction fees and other costs as set forth in Pricing and Rates available at us.etrade.com/what-we-offer/pricing-and-rates, which by this reference is incorporated herein and may be amended from time to time.

(B) Fee Waivers:

Morgan Stanley may, in its sole discretion, elect to discount or waive certain fees for certain customers. Morgan Stanley reserves the right to amend when fees are due and payable.

View the IRS letter showing Morgan Stanley is approved to act as a nonbank custodian