1 Columbia Management Coverdell Education Savings Account Set-up Kit
2 Important Notes This Kit describes the Coverdell Education Savings Account as modified by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The changes became effective starting in 2002, and were extended through the end of 2012 by the Tax Relief, Unemployment Insurance Re-authorization and Job Creation Act of A subsequent law (the American Taxpayer Relief Act of 2012), enacted in early 2013, made these provisions permanent for year after The Disclosure Statement provides general information about the rules and features of Education Savings Accounts. However, the Columbia Management Account Application and Education Savings Account Custodial Agreement are the primary documents governing your Columbia Management Education Savings Account, and these shall govern in the case of any difference with the Disclosure Statement. Since the information in this kit is only a summary, it may not cover all the details that could affect your personal situation. This kit does not address the tax treatment of Education Savings Accounts under state laws, which may vary. Therefore, you should consult your own tax advisor or the IRS if you have any questions about Education Savings Accounts, or about latest developments or state tax treatment of Education Savings Accounts. When used in this kit you or your refers to the person for whom the Education Savings Account is established. This individual is also called the Student. Where the use of you, your, or Student refers to an obligation, responsibility, or duty of the Student related to the Student s Education Savings Account, and the Student has not attained the age of majority in the state of residence ( age of majority ), the parent or guardian identified in the Account Application (the Parent ) must carry out the obligation, responsibility, or duty on the Student s behalf. Acceptance by the Custodian of contributions to the Account is expressly conditioned on the Parent s assumption of such duties and responsibilities. Information For Donors If you are a Donor other than a Student or Parent, read this information carefully. As a Donor, you must complete and sign the enclosed Adoption Agreement, designate the Student for whom the Education Savings Account is to be maintained, and complete the other required sections of the Agreement, including the initial investment elections and initial Designation of Beneficiary, and submit the signed form to the Custodian, along with your contribution. Once you submit the Agreement with the contribution, you will have no further control over the account or the amount contributed (unless you revoke the account). The Student (or Parent) will control investment choices and can withdraw amounts or change the beneficiary designation at any time without your consent. No amounts will revert to you.
5 Establishing Your Education Savings Account It s easy to establish a Columbia Management ESA. All the forms you need are enclosed in this kit. Please read the Disclosure Statement and the Custodial Agreement before completing the forms. Send all completed forms and checks to: Columbia Management Investment Services Corp. c/o Boston Financial Data Services, Inc., P.O. Box 8081, Boston, MA, If you wish to pre-pay the annual custodial fee, please include a separate check in the amount of $20, made payable to State Street Bank and Trust Company, please write on the memo line CESA custodial fee. If you have any questions regarding the establishment of your Columbia Management ESA, please call a representative at , Monday through Friday, 8:00 a.m. to 7:00 p.m. ET. > Donors who are eligible may contribute up to $2,000 per year toward the education of a Student who is currently under age 18. The total amount contributed to each ESA can not exceed $2,000 each year. > The Student must be under age 30 to initiate a Rollover or Transfer from another ESA. > Information must be provided about the Student, including the Student s Social Security number. The Student s Parent or Guardian will control the ESA while the Student is a minor. The Donor is the individual making the contribution to the ESA. Once the Donor has made the contribution, the Donor has no further control over the account unless the Donor is the adult Student or Student s Parent or Guardian. > Regardless of who establishes the account, information must be provided in Section 2 of the Account Application about the Parent or Guardian who will control the ESA on behalf of the minor Student. The Parent or Guardian must also complete Section 7 and sign Section 9. Guardians must submit written proof of Guardianship (as defined in he Guardian s state of residence). Special Needs Students If the Student named on your Columbia Management ESA Account Application is a Special Needs Student, please complete the Special Needs Student Certification Form and return it with your Account Application. New ESA (For Annual Contributions) 1. Complete the Account Application. You must provide the Student s Social Security number in order to set up an ESA. 2. Make your contribution check payable to State Street Bank and Trust Company FBO Student s Name. The minimum initial purchase per Fund is $1,000; $100 with automatic investment plan. 3. You must have the minor Student s Parent or Guardian sign the Account Application if you are not the Parent or Guardian. Transfer ESA (Direct transfer from an existing Trustee/Custodian) 1. Complete the Account Application indicating in Section 4 that this is a Transfer. Note: you may only transfer amounts from another ESA; transfers from a Traditional IRA, Roth IRA, or employer-sponsored retirement plan are not permitted. 2. Complete the Columbia Management ESA Transfer Form. Rollover ESA (If you are in receipt of ESA assets) 1. Complete the Account Application indicating in Section 4 that this is a Rollover. Note: you may only roll over amounts from another ESA; rollovers from a Traditional IRA, Roth IRA, or employer-sponsored retirement plan are not permitted. Rollovers must be completed within 60 days of receipt of your original ESA distribution. 2. Send a check for the total amount of your rollover made payable to State Street Bank and Trust Company FBO Student s Name. If the transfer or rollover represents a change of account ownership to a different family member, be sure to indicate in Section 4 of the Account Application the relationship of the new Beneficiary to the existing Beneficiary.
6 Columbia Management Education Savings Account You may use this Account Application to establish a Columbia Management ESA. Make your investment check payable to State Street Bank and Trust Company FBO Student s Name and mail it with this completed application to: Columbia Management Investment Services Corp., c/o Boston Financial Data Services, Inc., P.O. Box 8081, Boston, MA IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will ask for your name, street address, date of birth, and other information that will allow us to identify you. We may also ask for a copy of your driver s license or other identifying documents. Failure to provide any required information may result in a delay in processing this application or subsequent transactions, or result in the closing of your account. Escheatment: Your property may be transferred to the appropriate state (i.e., escheated) if no activity occurs in the account within the time period specified by state law. For more details, consult your state s website, or call your state government s escheatment customer service number. 1. Student information (Please print) Student is a Special Needs Student (include Certification Form) Your account will be registered as: State Street Bank and Trust Company, Custodian for: Student s Name (First Name) (MI) (Last Name) Social Security Number (Required) Birth Date (MM-DD-YYYY) (Required) Street Address City State Zip Code Daytime Phone Number Evening Phone Number 2. Parent/Guardian information (List only one) Mother Father Guardian (Submit proof of guardianship) Name of Parent/Guardian (First Name) (MI) (Last Name) Social Security Number (Required) Birth Date (MM-DD-YYYY) (Required) Street Address City State Zip Code Daytime Phone Number Evening Phone Number By checking this box, the Parent/Guardian elects to continue control of the ESA after the Student reaches the age of majority. If the box above is NOT checked, the Parent/Guardian will control the ESA until the Student reaches the age of majority in his/her state of residence, at which time control of the ESA will be automatically transferred to the Student. (See the State Street Bank and Trust Company Education Savings Account Custodial Agreement, Article V.) Note: The Parent is the same individual described as the Responsible Individual in Articles I - X of the Custodial Account Agreement, as the RI on all account registration materials and as the Parent in Article X of the Custodial Account Agreement and the Disclosure Statement. 3. Donor information (If different from parent) Name of Donor (First Name) (MI) (Last Name) Social Security Number (or Tax ID Number) (Required) Birth Date (MM-DD-YYYY) (Required) Street Address City State Zip Code Daytime Phone 0108 ESA Account Application: Page 1 of 5
7 4. Type of Education Savings Account Annual contribution. Check enclosed for $. For checks sent between January and April 15, indicate whether it is for current or preceding calendar year. This contribution does not exceed the maximum permitted amount as described in the Education Savings Account Disclosure Statement. The minimum initial purchase per Fund is $1,000; $100 with automatic investment plan (see Section 7). Transfer of existing ESA. Complete the separate Columbia Management ESA Transfer Form. Rollover of distribution from existing ESA. Check enclosed for $. It has been less than 60 days since I received the distribution from my ESA. See the Disclosure Statement for additional information and consult your tax advisor for help if needed. If you are transferring or rolling over an existing ESA, check the appropriate box below for the relationship of the Student named above to the Student in the existing ESA. The person named above is the: Same Person Child Sibling Child of Sibling Parent Step-Parent Step-Child Spouse Grandparent Spouse of One of the Foregoing First Cousin Other 5. Investment Selection Please visit columbiathreadneedle.com/us for investment options. Fund names and share classes must be entered. If no share class is selected, your application will be rejected and the account not opened. Refer to the Fund prospectus for minimum balance requirements. The minimum initial investment is $1,000 per Fund; $100 with automatic investment plan (see Section 7). If more than one fund is selected, each fund must have identical registration and class of shares. Class A Shares Class C Shares Provide individual allocation percentages below. Total of all elections must equal 100%. Investment allocation Please invest in the Columbia Fund Family listed below: Fund Name Share Class Amount $ 6. Designation of Beneficiary Use the space below to indicate the designated beneficiary for the Account. See the Instructions for important information about designating a beneficiary. The Student may change the beneficiary(ies) designated below at any time after the Account is established by filing a new Designation of Beneficiary with the Custodian. Any such subsequent Designation of Beneficiary will revoke all prior Designations. If the person designated as primary beneficiary does not survive the Student, the Account will pass to the alternate beneficiary (if any) named below if he or she survives the Student. If no designated beneficiary survives the Student, the Account will pass to the Student s estate (unless otherwise required under the laws of the state of the Student s residence). If you wish to designate multiple primary or alternate beneficiaries, you may do so by attaching a separate sheet listing the required information about each designated beneficiary; distributions to them will be in equal shares unless you specify different proportions. Primary Beneficiary Name (First Name) (MI) (Last Name) Relationship to Student Social Security Number Birth Date (MM-DD-YYYY) Alternate Beneficiary Name (First Name) (MI) (Last Name) Relationship to Student Social Security Number Birth Date (MM-DD-YYYY) ESA Account Application: Page 2 of
8 7. Account Options and Services (To Be Completed by Parent/Guardian) A. Telephone Exchange and Redemption Privileges Unless otherwise indicated below, I authorize Columbia funds, or their designated agents to accept telephone instructions from any person identifying himself as owner of the account or owner s selling agent to (a) exchange share(s) of my account for shares of the same class or equivalent class of any other Columbia fund and (b) to redeem shares, without signature guarantee, held in my account. Telephone exchanges and redemptions are subject to procedures and conditions set forth in the prospectus. I understand that up to $100,000 may be redeemed by telephone daily. Columbia funds, and their designated agents, will employ reasonable procedures specified by the Columbia fund to confirm that such telephone instructions are genuine. Neither Columbia funds, nor their designated agents, will be liable for any loss due to unauthorized or fraudulent, instructions if such procedures are followed. Telephone privileges may be modified or terminated without notice. Furthermore, I agree to indemnify and hold harmless Columbia Management Investment Services Corp., or any of their affiliates, that may be involved in transactions authorized by telephone, against any claim, loss, expense or damage, including reasonable fees of investigation and counsel in connection with any telephone instructions effected for my account. I do not want the Telephone Exchange Privilege I do not want the Telephone Redemption Privilege B. Automatic Investment Plan (Minimum investment: $100 with automatic investment plan) To start your automatic investment plan, please indicate your selection below and provide your bank information in Section E on page 4. I authorize Columbia Management Investment Services Corp. to draw on my bank account electronically or draw pre-authorized checks (refer to the Fund s prospectus for account minimums), for investment in my fund account(s) as indicated below: Fund Name Dollar Amount Day of Withdrawal* Monthly Quarterly Monthly Quarterly Monthly Quarterly * Unless otherwise specified, automatic purchases will be processed on the 5th (or next business day, if this falls on a weekend or holiday) of the month. To avoid an excess contribution, please be aware of your maximum IRA contribution amount. By using an automatic investment plan (AIP) to establish your account, you are agreeing to continue this service until you meet the Fund s minimum investment amount. If you cancel your AIP prior to meeting the minimum, your account may be subject to closure. If a check is not honored by your bank, or the value of shares in your account falls below the minimum, this Service may be suspended. In the event a check is returned marked unpaid, Columbia Management Investment Services Corp. will cancel the purchase, redeem shares in your account in an amount sufficient to reimburse the Fund for any loss it may have incurred, and charge a returned check fee, which will be deducted from your account. This service may be terminated by you or Columbia Management Investment Services Corp. at any time by written notice. You agree to hold the Funds and their agents free from all liability which may result from acts done in good faith and pursuant to these terms. C. Automatic Dollar-Cost Averaging Service (For transfers or rollovers) I authorize Columbia Management Investment Services Corp. to withdraw $ (refer to the Fund s prospectus for minimums) from my Columbia Fund account Monthly Quarterly to purchase shares of the same class of Columbia Fund, beginning on the day of (month), (year). I understand that if I exchange Class A or Class C shares of Columbia Funds, I will be subject to an initial sales charge at the time I purchase shares of another Columbia Fund. D. Reduced sales charges (CLASS A AND CLASS C SHARES ONLY) If you, or a member of your immediate family (as defined in the prospectus), own shares in other Columbia Funds (non-esa investments included), you may be eligible for a reduced sales charge. Please complete the Right of Accumulation section or the Letter of Intent section below. 1. Right of Accumulation Please link the tax identification numbers or account numbers listed below for Right of Accumulation privileges, so that this and future purchases will receive any discount for which they are eligible. Tax ID or Account Number Tax ID or Account Number Tax ID or Account Number 2. Letter of intent I want to reduce my sales charge by agreeing to invest the following amount over a 13-month period: Class A: $50,000 $100,000 $250,000 $500,000 $1,000,000 Class C: $100,000 $250,000 Columbia Management Investment Services Corp. will hold in escrow shares equal to 5% of the minimum purchase amount specified until resolution of the Letter of Intent. If the total amount invested within the 13-month period does not equal or exceed the specified minimum purchase, you will be required to pay the difference between the amount of sales charge paid and the amount of sales charge applicable to the total purchase actually made. Speak with your financial advisor for more information ESA Account Application: Page 3 of 5
9 E. Bank information Bank account number (Do not use spaces or dashes) Bank routing number (your bank can provide this) Name of bank account owner Name of joint owner, if applicable Account type: Checking Savings For further credit to the account of (if applicable) J. Smith 123 Main Street Anytown, USA Pay to the Order of Dollars YourBank 123 Main Street Anytown, USA Note : : :1109 ABA Routing Number Bank Account Number Check number 8. Broker/Dealer or Financial Advisor Designation Dealer/Advisor Firm Representative s Name Branch Office Address City State Zip Code Representative s ID Number Representative s Telephone Number Branch Number 9. Acknowledgement and Signature Information By signing below, I acknowledge that I: have received and read the prospectus. understand that this application is subject to acceptance. understand the terms of the investment described in the prospectus and in this application. understand that certain redemptions may be subject to contingent deferred sales charges. agree that the Columbia Funds, Columbia Management Investment Services, Corp. and its affiliates and their officers, directors, agents and employees will not be liable for any loss, liability, damage or expense for relying on this application or any instruction believed genuine. > I hereby establish a Columbia Management Education Savings Account and appoint State Street Bank and Trust Company as Custodian. > I understand that the annual custodial fee for the Columbia Management Education Savings Account is $20 per plan. The fee is subject to waiver if I have $25,000 or more of assets in the plans. > I have received and read the current Prospectus of each Fund in which I am investing. I have received and read the Columbia Management Education Savings Account Disclosure Statement and Custodial Agreement at least seven days before the date of my signature below, and acknowledge that there is no further right of revocation. I agree to be bound by all of the terms and conditions of the Disclosure Statement and the provisions set out in Articles I-X of the Custodial Agreement. > I am responsible for determining the Student s eligibility for the type of contribution indicated. > I am responsible for the tax consequences of distributions, including rollovers. > I certify that the Student is under 18 years old and that all contributions made on the Student s behalf to this or any other ESA(s) do not exceed $2,000 in a single tax year. If this is a transfer or rollover of an existing ESA, the undersigned certifies that the Student is less than 30 years old (or is a Special Needs Student) and that the relationship indicated in Section 4 is correct. > I certify that if this is a rollover of an ESA, the assets transferred are the same assets received in the distribution; that no rollover into an ESA has been made within the one-year period immediately preceding this rollover; that such distribution was received within 60 days of making this rollover; and that the Student identified in Section 1 is either the person for whose benefit the prior ESA was maintained or a member of such person s family (within Internal Revenue Code Section 529(e)(2)). ESA Account Application: Page 4 of
10 W-9 TIN Certification Check appropriate box for federal tax classification (required): Individual/Sole proprietor Partnership Corporation Trust C-Corporation Revocable (Optional Additional Trust Details) S-Corporation Irrevocable (Optional Additional Trust Details) Limited Liability Company (LLC) Estate C-Corporation Other S-Corporation Partnership Check here if owner is an Exempt Payee (defined in form W-9 instructions) Exempt Payee code: 1-An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2), 2-The United States or any of its agencies or instrumentalities, 3-A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities, 4- A foreign government or any of its political subdivisions, agencies, or instrumentalities, 5-A corporation, 6-A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States 7-A futures commission merchant registered with the Commodity Futures Trading Commission, 8-A real estate investment trust, 9-An entity registered at all times during the tax year under the Investment Company Act of 1940, 10-A common trust fund operated by a bank under section 584(a), 11-A financial institution, 12-A middleman known in the investment community as a nominee or custodian, 13-A trust exempt from tax under section 664 or described in section 4947 Foreign Account Tax Compliance Act Reporting A FATCA exemption code is required for persons submitting this form for accounts maintained outside of the United States by certain foreign financial institutions. If you are only submitting this form for an account you hold in the United States, no code is required. Otherwise, submit IRS Form W-9 separately. Under penalties of perjury, I certify that: (1) The number shown on this form is the student s correct taxpayer identification number, and (2) The student is not subject to backup withholding because: (a) the student is exempt from backup withholding, or (b) the student has not been notified by the Internal Revenue Service (IRS) that the student is subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified the student that the student is no longer subject to backup withholding, and (3) The student is a U.S. citizen or other U.S. person (defined below), and (4) The student is exempt from Foreign Account Tax Compliance Act (FATCA) reporting. Certification Instructions: You must cross out item 2 above if the student has been notified by the IRS that the student is currently subject to backup withholding because the student has failed to report all interest and dividends on his or her tax return. Definition of a U.S. person. For federal tax purposes, you are considered a U.S. person if you are: An individual who is a U.S. citizen or U.S. resident alien, A partnership, corporation, company, or association created or organized in the United States or under the laws of the Unite States, An estate (other than a foreign estate), or A domestic trust (as defined in Regulations section ). Non-U.S. persons should submit the appropriate Form W-8. Form W-9 and Form W-8 and their instruction are available upon request or on irs.gov. The Internal Revenue Service does not require your consent to any provision of this document other than the certifications in Part 9 required to avoid backup withholding. X / / Signature of Donor Date If the Donor is someone other than the Student or Parent/Guardian, the Parent/Guardian must also sign this Account Application below and complete Section 7 above. Guardians signing this Account Application must submit written proof of Guardianship. X / / Signature of Parent/Guardian or Student Date If the Student has reached the age of majority in his/her state of residence, he/she may sign this Account Application in lieu of the Parent/Guardian ESA Account Application: Page 5 of 5
11 Columbia Management Education Savings Account Special Needs Student certification form Use this form to certify that the designated beneficiary (or Student ) of a new or existing Columbia Management ESA is a Special Needs Student. A Special Needs Student is defined as a Student who, because of a physical, mental, or emotional condition (including a demonstrable learning disability) requires additional time to complete his or her education; any requirements specified in Internal Revenue Service regulations or rulings must also be satisfied. If the Student is a minor in the state of the Student s residence (or if the Student has reached the age of majority but has not filed a written notice with the Custodian assuming control of the ESA), the Parent or Guardian controlling the administration of the ESA should sign. If the Student controls the administration of the account, the Student should sign. Return this completed form, along with your Columbia Management ESA Account Application and any other forms, if applicable, to: Columbia Management Investment Services Corp. c/o Boston Financial Data Services, Inc. P.O. Box 8081 Boston, MA Student information (Please print) Student s Name (First Name) (MI) (Last Name) Social Security Number (Required) Birth Date (MM-DD-YYYY) (Required) Street Address City State Zip Code Columbia Management Education Savings Account Number 2. Signature By signing this form, I certify that the Student named above is a Special Needs Student (as defined above). I understand that adverse income tax consequences (including possible penalties) may apply for providing false or incorrect information. X / / Signature of Parent/Guardian or Student Date 0108
12 Columbia Management Education Savings Account Transfer form Complete this form if you are requesting a transfer of assets from your current ESA trustee/custodian to Columbia Management ESA. You may only transfer from another ESA; transfers from Traditional IRAs, Roth IRAs, or employer-sponsored retirement plans are not permitted. Please return this form, along with your completed Account Application, to: Columbia Management Investment Services Corp. c/o Boston Financial Data Services, Inc. P.O. Box 8081 Boston, MA Student information (Please print) Student s Name (First Name) (MI) (Last Name) Social Security Number (Required) Birth Date (MM-DD-YYYY) (Required) Street Address City State Zip Code Daytime Phone Number Evening Phone Number 2. Parent/Guardian information (For students under the age of majority in their state; check one) o Mother o Father o Guardian (Submit proof of guardianship) Name of Parent/Guardian (First Name) (MI) (Last Name) Social Security Number (Required) Birth Date (MM-DD-YYYY) (Required) Street Address City State Zip Code Daytime Phone Number Evening Phone Number 3. Prior account information Name of Resigning Trustee or Custodian Current Account Number Street Address City State Zip Code Person to Contact Telephone Number 4. Investment selection Please deposit these assets in my: New Columbia Management ESA. My investment choices are indicated on the attached ESA Account Application. Existing Columbia Management ESA, account number. Please invest in the Columbia Funds listed below: Fund % Fund % Fund % Fund % PLEASE SELECT ONE: Class A Shares Class C Shares The undersigned acknowledges having sole responsibility for the foregoing investment choices and having received a current prospectus for each Fund Selected. Please read the prospectus(es) of the Fund(s) selected before investing. The undersigned understand if no class of shares is selected, your application will be rejected and the account not opened. 0108
13 5. Transfer instructions To Resigning Trustee/Custodian: I have established an Education Savings Account with the Columbia family of funds and have appointed State Street Bank and Trust Company as the successor Custodian. I want to initiate a Transfer from the account described in Section 3, which your company holds for me. Please: Liquidate all or part ($ ) of the ESA account above and send the proceeds to Columbia Management Investment Services Corp. c/o Boston Financial Data Services, Inc., P.O. Box 8081, Boston, MA , immediately or at maturity. Make check payable to State Street Bank and Trust Company, FBO (Student s Name). I acknowledge that a penalty may apply for early withdrawals from certain types of investments. Transfer in kind (i.e., re-register) all or part ($ ) of my shares of the Columbia Fund Family to State Street Bank and Trust Company. If the account described in Section 3 contains shares of the Columbia family of funds, you may choose to transfer or roll them over in kind. Only Columbia Funds may be transferred or rolled over in kind; to transfer all other assets, they must be liquidated. 6. Signature If the Student is a minor under the law of the Student s state of residence, the Parent or Guardian must execute this Transfer Form for ESA assets. Signature guarantee may be required by current Trustee or Custodian. By signing below, I authorize and direct the current Trustee or Custodian to make the transfer specified on this form. X / / Signature of Parent/Guardian or Student (If over the age of majority) Date Signed by: Parent Guardian Student (If over the age of majority) Medallion Signature Guarantee (Only if required by current Trustee or Custodian) Signature guaranteed by: X / / Name of Bank or Dealer Firm Date X / / Signature of Officer and Title Date Note: Some Custodians and Trustees of ESAs require the completion of their own forms before sending a check to Columbia Management. To be completed by the Columbia family of funds: FOR OFFICE USE ONLY DO NOT WRITE BELOW THIS LINE Account Name/Account Number To resigning trustee: State Street Bank and Trust Company has established an ESA for the above-named account holder and will accept the transfer of account assets on a fiduciary-to-fiduciary basis. X / / Authorized Signature Date 0108
14 Columbia Management Education Savings Account Distribution form Complete this form if you are requesting a distribution from a Columbia Management ESA. Please return this form to: Columbia Management Investment Services Corp. c/o Boston Financial Data Services, Inc. P.O. Box 8081 Boston, MA Student information (Please print) Student s Name (First Name) (MI) (Last Name) Social Security Number (Required) Birth Date (MM-DD-YYYY) (Required) Account Number Fund Name 2. Reason for distribution (Choose one only) Normal Distribution. My distribution will be used for qualified education expenses at an eligible educational institution and does not exceed my qualified education expenses for this year. My distribution will be tax-free and penalty-free. Mandatory Distribution. I am over age 30 and not a Special Needs Student. I understand that my distributions may be subject to an additional 10% penalty tax imposed by the IRS in addition to ordinary income taxes. Non-Qualified Distribution. My distribution will not be used for qualified education expenses. I understand that my distribution may be subject to an additional 10% penalty tax imposed by the IRS in addition to ordinary income taxes. (Note: If you are under age 30, you may transfer your ESA balance to another member of your family under age 30 in order to avoid these adverse tax consequences.) 3. Method of distribution (Choose one only) A lump sum distribution, closing the ESA. A partial distribution of $, or number of shares, from (Fund Name). Systematic withdrawals based upon a fixed dollar amount $, from (Fund Name). Systematic withdrawals are to be paid: Monthly Quarterly Semi-annually Annually 4. Payee information If payee or address is different from the current name and address on file, the signature must be guaranteed. Payment to be made to me, the Student, using the current name and address on file for this account. I wish to have the distribution: Mailed to the below-named payee, payee bank, or educational institution for the benefit of the Student. Transferred via Automated Clearing House (ACH) to the below-named payee bank. (Attach a voided check.) Name of Payee or Payee Bank Bank Account Number (if applicable) Street Address City State Zip Code Note: I understand that my bank must be a member of the Automated Clearing House System (ACH) in order to transfer distributions to my bank via ACH. I authorize deposits to the bank account entered above. Connection to my account using the ACH System will be activated approximately 30 days after the application is received by Columbia Management Investment Services Corp. 0108
15 5. Signature and Taxpayer Identification Number Certification Under penalties of perjury, I certify that: (1) The number shown on this form is the student s correct taxpayer identification number, and (2) The student is not subject to backup withholding because: (a) the student is exempt from backup withholding, or (b) the student has not been notified by the Internal Revenue Service (IRS) that the student is subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified the student that the student is no longer subject to backup withholding, and (3) The student is a U.S. citizen or other U.S. person (defined in the Form W-9 instructions, which are available upon request or at (4) The student is exempt from Foreign Account Tax Compliance Act (FATCA) reporting. Certification Instructions: You must cross out item 2 above if the student has been notified by the IRS that the student is currently subject to backup withholding because the student has failed to report all interest and dividends on his or her tax return. Check appropriate box for Federal Tax Classification (Required): Individual Exempt Payee Exempt Payee Code (see Form W-9 instructions) If the student is a non-resident alien, please check the box below, and attach a complete W-8BEN. I am a foreign person or non-resident alien. If the Student is a minor under the law of Student s state of residence, the Parent or Guardian must execute this Distribution Form for ESA assets. I hereby elect that the assets held by the Custodian in the above ESA(s) be paid according to the instructions on this form. Additional amounts may be distributed from time to time upon presentation to Columbia Management Investment Services Corp. of written instructions in good order. I hereby release Columbia Management Investment Services Corp., the Columbia family of funds and any of their affiliates, and the Custodian, State Street Bank and Trust Company, and indemnify them from any and all claims arising from Columbia Management Investment Services Corp. or the Custodian s actions hereunder. For your account safety and security, please enter the information from Part 1 of this form below. Student s Name (First Name) (MI) (Last Name) Social Security Number Birth Date (MM-DD-YYYY) Address City State Zip Code The Internal Revenue Service does not require your consent to any provision of the document other than the certification required to avoid backup withholding. Signed by: Parent Guardian Student (If over the age of majority) Print Name of Parent/Guardian or Student (If over the age of majority) X / / Signature of Parent/Guardian or Student (If over the age of majority) Medallion Signature Guarantee Stamp Date Guarantor, please do not affix the guarantee unless all of the information on this page has been completed A Medallion Signature Guarantee is required if the recipient is not the listed designated beneficiary (Student) or if the beneficiary is under the age of majority in his/her state. 0108
16 Part 6. Medallion Signature Guarantee The Transfer Agent may require a Medallion Signature Guarantee for your signature in order to process certain transactions. A Medallion Signature Guarantee helps assure that a signature is genuine and not a forgery. A Medallion Signature Guarantee must be provided by an eligible guarantor institution including, but not limited to, the following: bank, credit union, savings association, broker or dealer, that participates in the Securities Transfer Association Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) or the New York Stock Exchange Medallion Signature Program (MSP). Notarization by a notary public is not an acceptable signature guarantee. The Transfer Agent reserves the right to reject a signature guarantee and to request additional documentation for any transaction. A Medallion Signature Guarantee is required if: 1. The transaction amount is over $100, You want your check made payable to someone other than yourself. 3. Your address has changed within the last 30 days. 4. You want the check mailed to an address other than the address of record. 5. You want proceeds to be sent according to existing bank account instructions not coded for outgoing ACH or wire, or to a bank account not on file. 6. You are the beneficiary of the account and the account owner is deceased (other documentation may be required). 7. You are changing legal ownership of your account. 0108
17 Establishing Your Education Savings Account Disclosure Statement Special Note This Disclosure Statement describes the rules applicable to Education Savings Accounts, which first became available on January 1, These accounts were originally known as Education IRAs but the name was changed to Education Savings Accounts. This Disclosure Statement reflects changes to the tax law rules governing Education Savings Accounts made by the Economic Growth and Tax Relief Reconciliation Act of 2001 ( EGTRRA ), which are effective as of January 1, 2002, and were made permanent by a law in early Contributions to an Education Savings Account are not tax deductible to the person making the contribution, but withdrawals that meet certain requirements are not subject to federal income taxes when received. This makes the dividends on and growth of the investments held in an Education Savings Account tax-free for federal income tax purposes if the requirements are met. Traditional IRAs, which have existed since 1975, are still available. Roth IRAs have been available since January 1, Both Traditional IRAs and Roth IRAs provide a tax-advantaged savings vehicle that can be used to save for higher education expenses as well as other needs, including retirement. This Disclosure Statement does not describe either Roth or Traditional IRAs. This Disclosure Statement also does not describe IRAs established in connection with a SIMPLE-IRA program or a Simplified Employee Pension (SEP) plan maintained by your employer. If you wish to receive information about these IRA products, including forms and explanatory materials, or if you need information about pre-egtrra Education Savings Account rules, call the phone number or write the address listed at the end of this Disclosure Statement. Establishing an Education Savings Account This Disclosure Statement contains information about an Education Savings Custodial Account with State Street Bank and Trust Company as Custodian. An Education Savings Account provides several tax benefits. While contributions to an Education Savings Account are not deductible to the contributor, dividends on and growth of the assets held in the Education Savings Account are not subject to federal income tax. Withdrawals from an Education Savings Account are excluded from income for federal income tax purposes if used for qualified education expenses (described below). State income tax treatment of your Education Savings Account may differ from federal treatment; ask your state tax department or your personal tax advisor for details. Regular annual contributions to Education Savings Accounts must be made in cash, on behalf of a designated individual (the Student ) who is less than 18 years old at the time of the contribution, and rollover contributions must be made on behalf of a Student who is less than age 30 at the time of the rollover. These age restrictions do not apply to a Student who is a Special Needs Student (defined below). The trustee or custodian must be a bank or other person who has been approved by the Secretary of the Treasury. Contributions may not be invested in life insurance or be commingled with other property except in a common trust or investment fund. The Student s interest in the account must be nonforfeitable at all times. Upon the death of the Student, the account may pass to a beneficiary who has been designated as such and who is a qualifying member of the Student s family (this is explained below). If the account does not pass to such a beneficiary, any balance in the account should be withdrawn by the appropriate representative of the Student s estate within 30 days of the date of death (if not so withdrawn, the taxable amount will nevertheless be treated for income tax purposes as if it had been withdrawn). You may obtain further information on Education Savings Accounts from any district office of the Internal Revenue Service. The Donor (the person who establishes the Account) may revoke a newly established Education Savings Account at any time within seven days after the date on which he or she receives this Disclosure Statement. An Education Savings Account established more than seven days after the date of receipt of this Disclosure Statement may not be revoked. To revoke the Education Savings Account, mail or deliver a written notice of revocation to the Custodian at the address which appears at the end of this Disclosure Statement. Mailed notice will be deemed given on the date that it is postmarked (or, if sent by certified or registered mail, on the date of certification or registration). If the Education Savings Account is revoked within the seven-day period, the Donor will receive payment of the entire amount originally contributed into the Education Savings Account, without adjustment for such items as sales charges, administrative expenses or fluctuations in market value. An Education Savings Account is established on behalf of the Student and is controlled by the Student (or Parent). The Donor making a contribution, if not the Student or Parent, may designate the initial investments in the Education Savings Account, but shall have no further rights, interests or obligations related to the Education Savings Account, except that he or she can make additional contributions, subject to the limits described below. The Account Application must be signed by the Donor, and any and all forms, applications, certifications and other
18 documents must be signed by the Parent if the Student has not yet reached the age of majority recognized by the laws of the state of Student s residence ( age of majority ). While the Student remains a minor, the Parent identified in the Account Application will exercise all of the rights and responsibilities of the Student, including the selection and exchange of Fund shares in which the Education Savings Account is invested. The Custodian s acceptance of the contribution to this Education Savings Account is conditioned on agreement by the Parent of any Student who is a minor to be bound by all of the terms and conditions of this Disclosure Agreement and the provisions set out in Articles I-X of the Custodial Account Agreement. The Student may notify the Custodian in writing that he or she has reached the age of majority in the state where the Student then resides (and provide any documentation the Custodian may request verifying the fact that he or she has attained such age). Upon receiving such request (and documentation, if requested), the Custodian will recognize the Student as the individual controlling the Custodial Account with power to exercise all rights and responsibilities related to the Education Savings Account, and the Parent will thereafter have no control or power over the Custodial Account. Note: The Custodian is under no obligation to determine whether any Parent actually holds the legal right and capacity to direct or control a Student s Education Savings Account. Fees and Expenses Custodian s Fees The following is a list of the fees charged by the Custodian for maintaining your Education Savings Account. Annual Maintenance Fee per Education Savings plan $20.00 Termination, Rollover, or Transfer of Account to Successor Custodian $20.00 You will be assessed a $15 fee for any checks rejected by your financial institution due to insufficient funds or other reasons. General Fee Policies Fees may be paid by you directly or the Custodian may deduct them from your Education Savings Account. Fees may be changed upon 30 days written notice to you. The full annual maintenance fee will be charged for any calendar year during which you have an Education Savings Account with us. This fee is not prorated for periods of less than one full year. If provided for in the Disclosure Statement or Adoption Agreement, termination fees are charged when your Custodial Account is closed whether the funds are distributed to your or transferred to a successor custodian or trustee. The Custodian may charge you for its reasonable expenses for services not covered by its fee schedule. Other Charges There may be sales or other charges associated with the purchase or redemption of shares of a Fund in which your Education Savings Account is invested. Before investing, be sure to read carefully the current prospectus of any Fund you are considering as an investment for your Education Savings Account for a description of applicable charges. Contributions Who may contribute to an Education Savings Account? Anyone, including the Student, may open and contribute to an Education Savings Account established on the Student s behalf, as long as the Student is less than 18 at the time of the contribution or is a Special Needs Student. Contributions (subject to the limitations described below) may be made for the benefit of a Student who is a Special Needs Student, irrespective of his or her age. The person making the contribution the Donor can be anyone, even the Student; the Donor does not have to be related to the Student. Beginning January 1, 2002, the Donor may be a corporation or other entity. A Special Needs Student is a Student who, because of a physical, mental or emotional condition (including a demonstrable learning disability), requires additional time to complete his or her education. Any requirements for being a Special Needs Student specified in any IRS regulations or rulings defining this term must also be satisfied. Are contributions to an Education Savings Account tax deductible? Contributions to an Education Savings Account are not deductible. This is a major difference between Education Savings Accounts and Traditional IRAs. When can contributions be made to an Education Savings Account? A contribution by an individual Donor for the year 2002 or subsequent years may be made by the due date (without extensions) of the individual s federal income tax return for that year. Typically this will be April 15 of the following year. Also, if the Donor is a corporation or another entity (not an individual), the contribution due date for any year is December 31 of that year. How much may be contributed to an Education Savings Account? Donors may contribute up to a combined $2,000 in a calendar year for the benefit of any one Student. For
19 example, if Uncle Joe contributes $1,300 to a Columbia Management Education Savings Account on behalf of Bobby, his nephew, all other contributions made on behalf of Bobby by Uncle Joe or any other potential Donor (such as parents or grandparents) to this or any other Education Savings Account, are limited to $700 for that tax year. Note: The Custodian is under no obligation, nor can it be, to determine whether the maximum limit for any Student has been reached. It is the Parent s responsibility to consult with the other parent or guardian to determine whether the maximum limits will be exceeded. For Donors or other contributors who are individuals with high income levels, the contribution limits may be reduced below $2,000. This depends upon the Donor s filing status and the amount of his or her modified adjusted gross income (MAGI). The table below shows how the contribution limits are restricted. How are the limits calculated for MAGI in the reduced contribution range? If the Donor s MAGI falls in the reduced contribution range, that Donor s contribution limit must be calculated. To do this, multiply the normal contribution limit ($2,000) by a fraction. The numerator is the amount by which MAGI exceeds the lower limit of the reduced contribution range ($95,000 if single, or $190,000 if married filing jointly). The denominator is $15,000 (single taxpayers) or $30,000 (married filing jointly). Subtract the amount obtained from multiplying from the normal limit. For example, assume that a Donor s MAGI for the year is $197,555 and she is married, filing jointly. The Education Savings Account contribution limit would be calculated as follows: 1. The amount by which MAGI exceeds the lower limit of the reduced contribution range: $197,555 $190,000 = $7, Divide this by $30,000: $7,555 $30,000 = Multiply this by the normal contribution limit of $2,000: x $2,000 = $ Subtract this from the $2,000 contribution limit: $2,000 $ = $1, This is the contribution limit. Education Savings Account contribution limits Modified Adjusted Gross Income (MAGI) level If donor is a single taxpayer or married filing separately If donor is married filing jointly Then donor may make Up to $95,000 Up to $190,000 Full contribution More than $95,000 but less than $110,000 More than $190,000 but less than $220,000 Reduced contribution (see explanation above) $110,000 and up $220,000 and up Zero (No contribution) Note: Limits are for years beginning on or after January 1, 2002.
20 Of course, if one Donor is prevented by these rules from making a full $2,000 contribution on behalf of a Student, another person (who is not the first Donor s spouse) may be willing to contribute so that the full $2,000 per year that the law allows will be added to the Student s Education Savings Account. How do I determine MAGI? For most taxpayers MAGI is the same as adjusted gross income, which is their gross income minus those deductions which are available to all taxpayers even if they don t itemize. (Instructions to calculate AGI are provided with income tax Form 1040 or 1040A.) Modified AGI is simply regular AGI adjusted to include certain amounts earned abroad. If a Donor has not earned income in any foreign country, Guam, American Samoa, the Northern Mariana Islands or Puerto Rico, normal AGI should be used in the calculations above. How are excess contributions penalized? If more than the maximum is contributed to the Student s Education Savings Account for a year, the excess is subject to a 6% penalty tax. The excess will be subject to an additional 6% penalty tax for each subsequent year that the excess remains the Education Savings Account. How are excess contributions corrected? Excess contributions may be corrected without paying a 6% penalty. To do so, the excess and any earnings on the excess must, in accordance with directions from the Student to the Custodian, be paid to the Student before the first day of the sixth month following the year in which the contribution was made (the Correction Deadline ). For calendar year taxpayers (most people), this means no later than May 31 of the following year. One other way to eliminate excess contributions (and possibly avoid the 6% excess contribution penalty tax) is to contribute an amount out of the Education Savings Account to a qualified tuition program, if there is one available to receive the contribution from the Education Savings Account. This must be done in the same year that the excess contribution was made. If you miss the deadline for either of the two ways to correct an overcontribution mentioned above, the penalty tax of 6% of the excess is due. However, you can avoid paying the 6% penalty in a subsequent year by undercontributing in that year. Each dollar of undercontribution offsets a dollar of excess contribution. Any excess contribution which is not eliminated in this way will be subject to another 6% penalty tax in the subsequent year. What happens if the excess contribution is not corrected by correction deadline? Any excess contribution withdrawn after the correction deadline for the year for which the contribution was made will subject the Student to the 6% excise tax. Unless an exception applies, the excess contribution and any earnings on it withdrawn after the correction deadline will be includable in the Student s taxable income and may be subject to a 10% withdrawal penalty. May a contribution be made to a qualified tuition program in the same year as a contribution to an Education Savings Account is made? Yes. Under prior rules a Donor could not contribute to an Education Savings Account in any year in which a contribution was made to a qualified tuition program for the same Student. (A qualified tuition program allows taxpayers to pay for a child s tuition in advance.) Under these prior rules, any amount contributed to an Education Savings Account in the same year that a contribution was made to a state prepaid tuition plan on behalf of the Student was an excess contribution, subjecting the Student to the 6% penalty tax discussed above. However, these prior rules do not apply to years beginning January 2, 2002, and continuing until such time as the rules and regulations are changed under law. Can I contribute to an Education Savings Account an amount received as a Military Death Gratuity? Yes, if you are an eligible survivor of a member of the armed services, and you received a military death gratuity or payment from Servicemember s Group Life Insurance (SGLI) after June 16, 2008, you may roll over all or part of this amount to one or more Education Savings Accounts for the benefit of eligible members of the beneficiary s family. Note that you must complete the contribution of such payments to an Education Savings Account within one year after the date you receive the gratuity or SGLI payment. This amount you can contribute from such a benefit or payment is subject to the contribution limits noted above. Your contribution also cannot exceed the total amount of the survivor benefits you received, reduced by the amount of any survivor benefits that were contributed to a Roth IRA or to other Education Savings Accounts. The amount of the survivor benefits contributed to an Education Savings Account will be treated as part of your basis or cost and so will not be taxed when distributed. Rollover contributions of a payment from a military death gratuity or SGLI are not subject to the once-in-12-months restriction on rollovers. See IRS Publication 970 for more information on these and other rules for Education Savings Accounts.