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SARSEP Retirement PlanEmployee GuideTable of contents2 Your employer’s retirement planRead this section to understand the benefits of participating in the retirement planoffered by your employer.3 FAQs about SARSEP plansRead the questions and responses in this section to better understand how theSARSEP IRA offered by your employer works.5 SARSEP IRA ApplicationTo enroll in the SARSEP IRA plan offered by your employer, complete the applicationon pages 5–10. The application must be signed in Section 7. This will be a Traditional IRA.11 SARSEP IRA Salary Deferral ElectionThis form can be used to indicate your contributions to the plan. Before completing it,check with your employer about whether this form should be used.12 Traditional or Roth IRA Custodial AgreementThis document should be read prior to opening the account. It defines the provisionsof the American Funds IRA.19 Traditional or Roth IRA Disclosure StatementThis document explains the financial and tax consequences of contributions toand distributions from an American Funds IRA. Fund informationFor a quick guide to fund names, numbers, minimums and share class restrictions,go to www.capitalgroup.com/fundguide.Financial professionalIf a signature guarantee is not required and you have prior approval from both American Funds and yourhome office, you can complete and submit this form signed electronically. Once the application has beensigned, you must print and deliver a copy of this application to the account owner.
Your employer’s retirement planOne of the mostimportant benefitsyour employer offersyou is a SARSEP —a retirement plandesigned especiallyfor small businessesand self-employedindividuals.Discover the benefits of investing in the plan. You can pay taxes later. Your contributions are automatically taken out ofyour paycheck before taxes are calculated. This can reduce your reportableincome for the year. And you don’t have to pay the taxes on the money as itgrows until you withdraw it. (Withdrawals are subject to ordinary income taxand, if taken before you reach age 59½, an additional 10% federal tax penalty.) Your money has more growth potential over time. The longer you invest,the greater the likelihood that you’ll reach your retirement goals, whateverthey may be. That’s because compounding enables you to make money onwhat you’ve invested and on any account earnings. The money in your account is yours — immediately. Your retirement planhas no vesting requirements. That means there’s no waiting period beforethe money is yours to keep. You are in control of your investments. You get to decide how you’d like toinvest your contributions in the American Funds. You can contribute up to25% of your compensation or the current limit allowed by law, whichever isless. (Employees 50 or older may also make additional catch-up contributions.See the table on page 11 for catch-up contribution limits.)2 of 21
FAQs about SARSEP plans1. What is a SARSEP plan?A SARSEP is a retirement planavailable to self-employedindividuals and companieswith 25 or fewer eligibleemployees throughout thepreceding year. With a SARSEP,a Traditional IndividualRetirement Account (IRA) isestablished on your behalf tohold the contributions madeto your account.2. Who is eligible to participate?Generally, all of the employees atyour organization are eligible toparticipate in the plan. However,the following employees maybe excluded by the companyfrom participating: Those with annual earnings ofless than 650 Union members covered by a3. How much can I contributeto a SARSEP each year?You may contribute, on a pre-tax,salary-deferred basis, as little as 25 a month (as indexed forinflation). See the table onpage 11 of this guide for annualemployee contribution limits.If you also participate in a 401(k)or 403(b) plan, your contributionsin all plans are limited to theindexed maximum amount.(If you are self-employed, seethe American Funds SARSEP PlanSponsor Guide, available from yourfinancial professional, for moredetails about contribution amounts.)5. Can I still contribute to anIRA in addition to a SARSEP?Yes. You should speak to aqualified tax consultant if youhave any questions regardinglimits and deductions.6. How much does it cost to openand maintain a SARSEP account?You’ll be charged 10 to establishthe SARSEP IRA. In addition, anannual fee (currently 10) isassessed that covers all fundselections and necessary accountmaintenance. This fee is deductedfrom your account in December ofeach year.4. What’s a catch-up contribution?Catch-up contributions areadditional annual amounts thatemployees 50 and older maymake. See the table on page 11for catch-up contribution limits.Continued on next pagecollective bargaining agreementEmployer contributions at various salary levels Nonresident aliens with no U.S.source income Employees under 21 years of age Those who have worked for thecompany fewer than three ofthe immediately preceding fiveplan years5% contributionto your account15% contributionto your account25% contributionto your account 20,000 1,000 3,000 50058,000†Annual salary290,000 **Currently, only the first 290,000 in annual salary may be considered when calculating contributions.†Maximum annual contributions3 of 21
FAQs about SARSEP plans7. Are employee SARSEPcontributions subject toSocial Security tax?Yes. Although federal incometaxes are deferred, SARSEPcontributions are reported onyour W-2 form and are subjectto Social Security tax.8. When can I withdraw moneyfrom my SARSEP?You can make withdrawals fromyour SARSEP at any time; however,ordinary income taxes and apenalty may apply if you’re notyet 59½ (see the next questionfor more details). You’re alsopermitted to roll over fundsfrom this account to any otherretirement account that acceptsrollovers. Only one rolloverbetween IRAs is allowed inany 12-month period.9. How are withdrawals taxed?Withdrawals are subject toordinary income tax. In addition,withdrawals made before youreach age 59½ are subject to a10% federal penalty tax, unlessan exception — such as death ordisability — applies. Please seethe Custodial Agreement,beginning on page 12, for acomplete list of exceptions.10. Must I begin taking withdrawalsat age 59½?No, but you must begin takingwithdrawals by April 1 of the yearfollowing the calendar year inwhich you reach age 72. If youreached age 701/2 before January 1,(continued)2020, you must begin takingwithdrawals by April 1 of the yearfollowing the year in which youreach age 701/2.11. What happens if I leavethe company?You can leave the IRA intact andcontinue to have your moneyaccumulate tax-deferred. Youmay also make Traditional IRAcontributions to your SARSEP IRA,withdraw the assets (subject totaxes and possible penalties)or transfer the assets to anotherIRA or retirement plan.12. Can I set up a beneficiary for myaccount in the event of my death?Yes. The assets in your account goto your designated beneficiary.Please see Section 3 of theSARSEP IRA Application in thisguide to make a beneficiarydesignation. In the event you failto make a designation, the termsof the Custodial Agreement(Section 8(a)) will determineyour beneficiary.13. What SARSEP materials will myemployer provide?Your employer must provideyou with a copy of the executedSARSEP Adoption Agreement,this Q&A summary, the CustodialAgreement and the DisclosureStatement. Whenever yourSARSEP plan is amended, youremployer must provide you witha copy of the amendment and aclear, written explanation of anychanges to the plan. If you’re4 of 21self-employed, you’ll alsoneed to read the materialsmentioned above.14. Why must I read theCustodial Agreement andthe Disclosure Statement?The Custodial Agreementdefines the rules of the IRA andthe role of the Custodian. TheDisclosure Statement, written innontechnical language, explainsyour options for contributionsand withdrawals, your ability toroll the proceeds of your SARSEPIRA into another IRA and the taximplications of those options.For more information, refer toIRS Publication 560.15. How will I get information aboutmy SARSEP account?You’ll receive a quarterlystatement showing the resultsof the investments you’ve chosenon the SARSEP IRA Application(in Section 2). You can also visitwww.capitalgroup.com, or call(800) 421-4225 to change yourinvestments or for currentinvestment information andmonth-end results.16. Where can I find moreinformation about the plan?You should contact your employer,as named in Section 1 of theSARSEP Adoption Agreement thatyour employer provided to you.If you’re self-employed, be sureto read the SARSEP PlanSponsor Guide.
Clear and reset formSARSEP IRA ApplicationTo be completed by employer(Name of companyCompany contact)Ext.Daytime phoneCompany addressCityStateZIPCheck one:A. B. Transition plan (must be accompanied by a copy of the employer’s completed and signed SARSEP Adoption Agreement)(All SARSEP plans must have been established by 12/31/1996.)Existing American Funds plan (provide Plan ID)To be completed by employee1Information about youImportant: This section must be completed, and the application must be signed in Section 7 before an account can be established.Please type or print clearly.–––SSN of IRA owner–Date of birth of IRA owner (mm/dd/yyyy)First name of IRA ownerMICountry of citizenshipLastResidence address (physical address required — no P.O. boxes)CityStateZIPMailing address (if different from residence address)CityStateZIP(Email address** Your privacy is important to us. For information on our privacy policies, visit www.capitalgroup.com.01/21)Daytime phone5 of 21
SARSEP IRA Application2A.Investment instructions Invest 100% of my contributions in Class A shares of the American Funds Target Date Retirement Series fund with the year closest tomy 65th birthday. New funds for future retirement dates may be added to the series as needed.Target Date Fund 2065 (designed for those born 1998 or later)Target Date Fund 2035 (designed for those born 1968–1972)Target Date Fund 2060 (designed for those born 1993–1997)Target Date Fund 2030 (designed for those born 1963–1967)Target Date Fund 2055 (designed for those born 1988–1992)Target Date Fund 2025 (designed for those born 1958–1962)Target Date Fund 2050 (designed for those born 1983–1987)Target Date Fund 2020 (designed for those born 1953–1957)Target Date Fund 2045 (designed for those born 1978–1982)Target Date Fund 2015 (designed for those born 1948–1952)Target Date Fund 2040 (designed for those born 1973–1977)Target Date Fund 2010 (designed for those born 1947 or earlier)ORB. Invest my contribution as instructed below. For a quick guide to fund names, numbers, minimums and share class restrictions, go towww.capitalgroup.com/fundguide. If you do not select a share class, investments will be placed in Class A shares. (The percentageyou elect must equal the minimum of 25 per fund. You may customize your investment strategy by selecting a combination of funds.)Select a share class: Class AOR Class CFund name or numberPercentage(whole percentages only)%%%%%%Total%Notes: To make changes to your fund selections and/or percentage allocations in the future, please notify your employer.01/21 To rebalance funds or set up an automatic exchange plan, visit our website at www.capitalgroup.com. To add bank information for future redemption requests, include a completed Add/Update Bank Information form. The 10 setup fee will be deducted from your account.6 of 21
SARSEP IRA Application3Beneficiary designationWe encourage you to consult a professional regarding the tax-law and estate planning implications of your beneficiary designation. All statedpercentages must be whole percentages (e.g., 33%, not 33.3%). If the percentages do not add up to 100%, each beneficiary’s share will be basedproportionately on the stated percentages. When percentages are not indicated, the beneficiaries’ shares will be divided equally.Notes: Your spouse may need to sign in Section 6. If you wish to name more than one trust or entity, customize your designation or needmore space, attach a separate page. Include the name, address, relationship, date of birth or trust, SSN/TIN and percentage foreach beneficiary. If you name a trust as beneficiary, provide the full legal name of the trust. Example: “The Davis Family Trust.”A. Primary Beneficiary(ies): If any designated Primary Beneficiary(ies) dies before I do, that beneficiary’s share will be divided proportionatelyamong the surviving Primary Beneficiaries unless otherwise indicated. If no Primary Beneficiaries survive me, assets will be paid to thenamed Contingent Beneficiaries, if any.1.First name (print)MISuffixLast nameORName of trust or other entity (print)AddressCity Other entitySpouse* Child of owner Other person TrustStateDate of birth or trust (mm/dd/yyyy)%SSN/TINWhole % only2.First name (print)MI Spouse* Child of owner Other personSuffixLast nameAddressCityStateMISSNWhole % onlySuffixLast nameAddress Spouse* Child of owner Other personCityStateMISSNWhole % onlySuffixLast nameAddress Spouse* Child of owner Other personZIP%Date of birth (mm/dd/yyyy)4.First name (print)ZIP%Date of birth (mm/dd/yyyy)3.First name (print)ZIPCityStateZIP%Date of birth (mm/dd/yyyy)SSNWhole % only01/21* By naming my spouse as a beneficiary, I elect to treat such spouse as a beneficiary while we are married. Effective immediately upon the divorce, annulmentor other lawful dissolution of my marriage, the designation shall be null and void, unless after the dissolution of my marriage I affirmatively elect to name myformer spouse as my non-spouse beneficiary.Continued on next page7 of 21
SARSEP IRA Application3Beneficiary designation(continued)Important: Section 3-A must be completed prior to completing Section 3-B.B. Contingent Beneficiary(ies): If no Primary Beneficiary survives me, pay my benefits to the following Contingent Beneficiary(ies).If any designated Contingent Beneficiary(ies) dies before I do, that beneficiary’s share will be divided proportionately among the survivingContingent Beneficiaries unless otherwise indicated. If no Contingent Beneficiaries survive me, assets will be paid according to theCustodial Agreement default designation.1.First name (print)MISuffixLast nameORName of trust or other entity (print)AddressCity Other entitySpouse* Child of owner Other person TrustStateDate of birth or trust (mm/dd/yyyy)%SSN/TINWhole % only2.First name (print)MI Spouse* Child of owner Other personSuffixLast nameAddressCityStateMISSNWhole % onlySuffixLast nameAddress Spouse* Child of owner Other personCityStateMISSNWhole % onlySuffixLast nameAddress Spouse* Child of owner Other personCityStateMISSNWhole % onlySuffixLast nameAddress Spouse* Child of owner Other personZIP%Date of birth (mm/dd/yyyy)5.First name (print)ZIP%Date of birth (mm/dd/yyyy)4.First name (print)ZIP%Date of birth (mm/dd/yyyy)3.First name (print)ZIPCityStateZIP%Date of birth (mm/dd/yyyy)SSNWhole % only01/21* By naming my spouse as a beneficiary, I elect to treat such spouse as a beneficiary while we are married. Effective immediately upon the divorce, annulmentor other lawful dissolution of my marriage, the designation shall be null and void, unless after the dissolution of my marriage I affirmatively elect to name myformer spouse as my non-spouse beneficiary.8 of 21
SARSEP IRA Application4Decline telephone and website exchange and/or redemption privileges (optional)Telephone and website exchange and redemption privileges will automatically be enabled on your account unless you decline below.To decline these privileges, read the individual statements and check the applicable box(es).Note: If either option is declined, no one associated with this account, including your financial professional, will be able to request exchangesor redemptions by telephone or via the website. Requests would need to be submitted in writing.Exchanges: I DO NOT want the option of using the telephone and website exchange privilege. Redemptions: I DO NOT want the option of using the telephone and website redemption privilege.5 Financial professionalThis section must be filled out completely by the financial professional(s).We authorize American Funds Service Company (AFS) to act as our agent for this account and agree to notify AFS of purchases made undera Statement of Intention or Rights of Accumulation. If applicable, we have provided a copy of our SEC Form CRS to the investor named onthis application.(Name(s) of professional(s)Professional/team ID #Branch numberBranch addressCity)Ext.Daytime phoneStateZIPX01/21Name of broker-dealer firm (as it appears on the Selling Group Agreement)Signature of person authorized to sign for the broker-dealer — required9 of 21
SARSEP IRA Application6Spousal consent to beneficiary designation — if requiredIf you are married to the IRA owner and he or she designated a Primary Beneficiary(ies) other than you, please consult your financial professionalabout the state-law and tax-law implications of this beneficiary designation, including the need for your consent.I am the spouse of the IRA owner named in Section 1, and I expressly consent to the beneficiary(ies) designated in Section 3 or attached.XName of spouse of IRA owner (print)/Signature of spouse of IRA ownerDate/(mm/dd/yyyy)This document may not be signed using Adobe Acrobat Reader’s "fill and sign" feature.7Signature of SARSEP owner — requiredEmployees: Retain a copy for your records and return the original to your employer. You must sign below in order to open your account.I hereby establish an American Funds Traditional IRA, appoint Capital Bank and Trust CompanySM (CB&T) as Custodian and acknowledgethat I have received, read and agree to the terms set forth in the American Funds Traditional or Roth IRA Custodial Agreement. I acknowledgethat I have read and agree to the terms of the current prospectus(es) of the fund(s) selected and consent to the 10 setup fee and the annualcustodial fee (currently 10).I understand that I and all shareholders at my address will receive one copy of fund documents (such as annual reports and proxystatements) unless I opt out by calling (800) 421-4225.I agree to the conditions of the telephone and website exchange/redemption authorization unless I have declined those privileges and agreeto indemnify and hold harmless CB&T; any of its affiliates or mutual funds managed by such affiliates; and each of their respective directors;trustees; officers; employees; and agents from any loss, expense or cost arising from such instructions once the telephone and websiteexchange and/or redemption privileges have been established.I certify under penalty of perjury that my Social Security number is correct. I also certify that, if I am married and have not named my spouseas Primary Beneficiary, I have consulted my financial professional about the need for spousal consent. If no beneficiary is named, theCustodial Agreement default will apply. I authorize the financial professional assigned to my account to have access to my account and to act onmy behalf with respect to my account. If applicable, I acknowledge that I have received and read a copy of my financial professional’s SEC FormCRS.I understand that to comply with federal regulations, information provided on this application will be used to verify my identity. For example,my identity may be verified through the use of a database maintained by a third party. If CB&T is unable to verify my identity, I understandthat CB&T may need to take action, possibly including closing my account and redeeming the shares at the current market price, and that suchaction may have tax consequences, including a tax penalty.If this document is signed electronically, I consent to be legally bound by this document and subsequ
the SARSEP IRA. In addition, an . annual fee (currently 10) is assessed that covers all fund selections and necessary account maintenance. This fee is deducted from your account in December of each year. Continued on next page. FAQs about SARSEP plans. Employer contributions at various salary levels.
