education fund

8/6/2019 Education Fund

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1300 N. State StreetBellingham, WA 98225-4730www.saturna.com1-800-SATURNA

Education Savings Account



Table o Contents

QuickStart toOpening an ESA

The Saturna Advantage Page 3

Contributions Page 4

Distributions Page 5

Termination andResponsible Party Page 4

Li etime LearningCredit Page 6

AdditionalIn ormation Page 7

Education SavingsAccount Application Page 8

HOPE ScholarshipCredit Page 6

IRS Form 5305-E Page 9

Coverdell Education Savings

AccountsNamed Education IRAs when rst established in1998, these accounts were renamed CoverdellEducation Savings Accounts (ESA) in 2001. The ESAis a tax- avored account or the purpose o saving

or education expenses. ESAs allow contributionsor any child under age 18, and tax- ree distributionsor a broad variety o education expenses up until

age 30. Annual contributions to the ESA may notexceed $2,000 (eligible contributions may be less i the taxpayer’s income exceeds certain thresholds). Allcontributions must be in cash. Like an IRA, an ESA willlose its tax-exempt status i it is used in a prohibitedtransaction.

To Open a Saturna ESA

Complete the Saturna ESA application (page 8),giving in ormation about the account’s registrationand investment directions.

Read the und prospectuses and other in ormationabout various Saturna investment options.

Create an Education Savings Account by lling outthe IRS Form 5305-E included in this brochure (page9).

Write your ESA contribution check(s), payable toeach Fund in which you are investing, and mail toSaturna with your Form 5305-E (page 9) and yourapplication (page 8).

NOTE: I you wish to purchase non-Saturna a liatedmutual unds, stocks, bonds, or options or your ESA, besure to ll out a Saturna Brokerage Services application.

Quickstartto education savings.

ESA Trans er Form Page 11A

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The Saturna AdvantageOpen your ESA with Saturna and take advantage o :

▲ Wide Range o Investment ChoicesWe o er a selection o Saturna no-load mutual unds with a variety o investment objectives. By investing in morethan one und, you can tailor your ESA to refect your own risk and return objectives. In addition, in a sel -directedSaturna Brokerage ESA, you can purchase stocks, bonds, xed income securities including CDs and U.S. Treasuries,plus a wide range o una liated mutual unds.

▲ Personalized ServiceAt Saturna Capital, we help make saving or education easy. Our sta is dedicated to helping you with yourquestions. Your trained account representative will help you customize your education savings strategy. You can eveninvest automatically rom your bank account to your Saturna mutual und ESA. Any way you choose to invest, you’llget one consolidated statement to track your ESA port olio.

▲ No ESA Fees with Saturna’s No-Load Mutual FundsFor ESAs invested in Saturna’s no-load mutual unds, there are no ESA ees. There are no ees on contributions ordistributions. Trades using sel -directed brokerage ESAs are subject to commissions (you can nd the commissionschedule at www.saturna.com/sbs/ and in the Saturna Brokerage Services brochure).

About Saturna Capital “Value for your money” Saturna Capital Corporation was ounded in 1989 bypro essionals with extensive experience in the investmentbusiness. The rm is primarily owned by employees and

their amilies. We are guided by six key principles:▲ Solid investment results▲ Quality personal service▲ Uncompromising loyalty to clients▲ Advanced technology▲ Financial strength▲ Low ees and expenses

Saturna helps individuals and institutions build wealth, earnincome and preserve capital.

Saturna’s deep-rooted belie in value investing shinesthrough in the quality o our investments. We don’t ollowtrends, we analyze opportunities. In choosing investments,Saturna’s pro essionals cover over 180 industries andanalyze over 5,000 equities.

Years o experience have given Saturna nancial strengthand stability. Most important to Saturna, however, isachieving success or our clients. We believe that our clients’interests always come rst. Perhaps this is why manyo our client relationships span years.



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Contributions Aggregate contributions that may be made by allcontributors to one (or more) ESA established on behal o any particular bene ciary are limited to $2,000 oreach year. Corporations, tax-exempt organizations andother entities may make contributions to an unlimitednumber o parties’ ESAs.

The maximum income that joint tax return lers canreport and still make a ull contribution to an ESAis $190,000. For incomes up to $220,000, lessercontributions can be made. For single lers, the ullcontribution income limit is $95,000, phasing out at$110,000.

Contributions to an ESA may be made up to April 15th(the tax return due date, not including extensions)

or a contribution to apply to the preceding year.Any contribution to an ESA is treated as a gi t romthe contributor to the bene ciary at the time o thecontribution, meaning annual contributions are subject tothe gi t tax exclusion and are excludable or purposes o the generation-skipping trans er tax.

A 6% excise applies to excess contributions.Contributions are considered excess when they are:

• More than a total of $2,000 per designated bene ciaryper year;

• Made in a year when the contributor’s adjusted grossincome tops the limits or income eligibility;

• Contributed to a designated bene ciary who is 18years o age or older;

• Made in violation of applicable rollover rules.

Excess contributions, i corrected in a timely manner, willavoid the penalty.

ESA Investing Guidelines

Termination

The balance remaining in an ESA must be distributed within 30 days a ter a bene ciary reaches age 30. Also,distribution o the account balance o a deceased bene ciary must be made within 30 days a ter death o a bene ciaryunder age 30. Where such a distribution is required, the balance at the close o the 30-day period is deemed to bedistributed at that time.

Responsible Party The person who controls the ESA is the “responsible individual” as named in the account agreement. The responsibleparty typically is the parent or guardian o the bene ciary.



Upon the subject o education, not presuming to dictate any plan or system respectingit, I can only say that I view it as the most important subject which we as a people may be engaged in.

-Abraham Lincoln

DistributionsDistributions rom ESAs are tax- ree provided thatthey are used to pay the bene ciary’s quali ededucation expenses. Tuition, ees, books, supplies,and equipment required or attendance at an eligibleeducational institution are quali ed expenses. Theterm includes room and board expenses, i (1) thebene ciary is enrolled in a program leading to arecognized educational credential and (2) the studentcarries at least one-hal the normal ull-time class load

or a chosen course o study.

You may also use the Education Savings Accountto pay or elementary and secondary expensesat private, public, or religious schools. Thisincludes academic tutoring, computer technology orequipment (such as internet services), room and board,transportation, uni orms, and supplemental items andservices (including extended day care). Additionalexceptions are available to special needs bene ciaries.Quali ed education expenses are reduced by theamount o any scholarships or nancial aid received.

Taxpayers may claim the HOPE Scholarship/AmericanOpportunity Education Credit or the Li etime LearningCredit in the same year that a tax- ree distribution ismade rom an ESA. However, the distributions cannotcover the same education expense.

Because contributions to ESAs are treated as gi ts,

distributions rom the accounts are made only tobene ciaries. Distributions o ESAs are excludablerom gross income to the extent that the distribution

does not exceed the quali ed education expensesincurred by the bene ciary during the year in whichthe distribution is made. Distributions are tax exemptregardless o whether the bene ciary attends aneducation institution on a ull-time, hal -time, or lessthan hal -time basis.

Distributions in amounts greater than allowed tax-ree are taxed under IRS Code Section 72 annuity

rules. There is an additional 10% tax imposed on anytaxpayer who receives an ESA distribution that isincludable in gross income, with certain exceptions.

Amounts remaining in an Eduction Savings Accountmay be rolled over into another ESA or the educationo another bene ciary in the bene ciary’s amily.Similarly, any change in bene ciary does not constitutea distribution i the new bene ciary is a membero the amily o the original bene ciary. A person’s

amily members are determined under IRS CodeSection 529(e)(2). Alternatively, assets remaining inthe ESA may be distributed to the original bene ciarywho must include the earnings component o thedistribution in income and pay a 10% penalty.

To withdraw unds rom an ESA, please use anESA Distribution Form available on our website,www.saturna.com, or by calling us toll- ree at 800/SATURNA.



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Scholarships HOPE Scholarship CreditAmerican Opportunity CreditWhile not part o the Education Savings Account,the HOPE Scholarship Credit (renamed AmericanOpportunity Credit in 2009) does interrelate with theESA. Taxpayers may be able to claim a nonre undableHOPE Scholarship/American Opportunity EducationCredit against their ederal income taxes. The credit isclaimed or the quali ed tuition and related expenseso each student in the taxpayer’s amily who is enrolledat least hal -time in one o the rst two years o postsecondary education and who is enrolled in a programleading to a recognized educational credential. Themaximum credit a taxpayer may claim or a taxableyear is $2,500 multiplied by the number o studentsin the amily who meet the entrollment criteria. Theamount a taxpayer may claim is gradually reduced ortaxpayers with modi ed adjusted gross incomes above$80,000 ($160,000 or joint lers), and phased out at$90,000 ($180,000 or joint lers). See IRS Publication970 or more in ormation.

Li etime Learning CreditSimilarly, the Li etime Learning Credit also interrelateswith the ESA. Taxpayers may be able to claim anonre undable Li etime Learning Credit against their

ederal income taxes. The credit is claimed or thequali ed tuition and related expenses o each studentin the taxpayer’s amily who is enrolled in eligibleeducation institutions. Unlike the HOPE Scholarship/American Oppotunity Credit, students are not requiredto be enrolled at least hal -time in one o the rsttwo years o post secondary education. The amountthat may be claimed as a credit is equal to 20% o the taxpayer’s rst $10,000 o out-o -pocket quali edtuition and other expenses or all the students in the

amily. The amount a taxpayer may claim is graduallyreduced or taxpayers with modi ed adjusted grossincomes above $50,000 ($100,000 or joint lers), andphased out at $60,000 ($120,000 or joint lers).



A CautionDespite the tax advantages, lower- and middle-incomeparents who expect their child will be eligible or

nancial aid in college should think twice about takingadvantage o Education Savings Accounts. You couldend up losing more in nancial aid than you’ll save intaxes. That’s because an Education Savings Accountmust be set up in the child’s name. In determininghow much a amily can a ord to contribute to the costo college, nancial aid ormulas count assets held ina child’s name much more heavily than assets in theparent’s name.

Do not go where the path may lead; go instead where there is no path and leave atrail.

-Ralph Waldo Emerson



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In the event o my death or incapacity while the designated benefciary is a minor under state law, the ollowing personshall become the responsible party:

Education Savings Account Application

➏

Saturna Use Only Accepted by: Date:

SignatureI have ull right, power, and authority and legal capacity to establish an Education Savings Account and to make the investments selected. Iunderstand and agree to all terms and conditions set orth in this Saturna Capital Education Savings Account Application. I have created theESA (Educational IRA) by completing IRS Form 5305-E, which is attached to this Application. I acknowledge that I have received and read thecurrent Pro spec tus(es) o any und(s) being purchased. I understand no share certi cates will be issued. I understand that my property may betrans erred to the appropriate state i no activity occurs in the account within the time period speci ed by state law. I certi y, under penalties o perjury, that I am not subject to backup withholding under the provisions o section 3406(a)(1)(C) o the Internal Revenue Code.

Signed: Date:

Mail completed orms and contributions to:

Saturna CapitalP.O. Box NBellingham, WA 98227-0596

Note: For Saturna Brokerage Accounts, a separate,additional application is required. Please see the SaturnaBrokerage brochure or more details.

❒ Begin automatic investing (voided check attached) :$25 Minimum Per Fund a ter initial contribution.

every

(Speci y period & date: i.e. “month on 15th”)

Grantor (Responsible Party):

Email:

( ) -Daytime Telephone:

( ) -Evening Telephone:

- -Social Security Number:Date o Birth (MM-DD-YYYY):

- -Physical / Street Address (required):

City State Zip

Last NameFirst Name M.I.

Make sure to complete all steps or your application cannot be processed.

Incomplete applications will be returned.

Be sure to read the prospectus of any mutual fund you select.

➏

➊

➋

➍➎

Designated Benefciary:

- -Social Security Number:Date o Birth (MM-DD-YYYY):

- -

City State Zip

Street Address:

Relationship:

Last NameFirst Name M.I.

▲Identifcation. Attach a legible photocopy o the Grantor’s driver’s license, passport or other government-issued identity document.

Complete IRS Form 5305-E on the next page. Please be sure to sign the back. Application is incomplete i not included.

➌ Initial Investment Selection ( $100 Minimum Per Fund):

Please send separatechecks payable toeach und selected.

$❒ Sextant International

$❒ Sextant Growth

$❒ Sextant Short-Term Bond

$❒ Sextant Bond Income

$❒ Sextant Core

$❒ Amana Income

$❒ Amana Growth

Initial Contribution or

tax year 20 .

$❒ Sextant International

$❒ Sextant Growth

$❒ Sextant Short-Term Bond

$❒ Sextant Bond Income

$❒ Sextant Core

$❒ Amana Growth

$❒ Amana Income

❒ Mr. ❒ Mrs./Ms. ❒ Dr.

$❒ Amana Developing World

$❒ Amana Developing World

Mailing Address (optional):

City State Zip



✂

Saturna Trust Company 1300 N. State Street, Bellingham, WA 98225



Notwithstanding any other articles which may be added or incorporated, the provisions of Articles I through III will be controlling. Anyadditional articles inconsistent with section 530 and the related regulations will be invalid.

This agreement will be amended as necessary to comply with the provisions of the Code and the related regulations. Otheramendments may be made with the consent of the grantor and trustee whose signatures appear below.

Page 2Form 5305-E (Rev. 3-2002)

Article VIII

Article X may be used for any additional provisions. If no other provisions will be added, draw a line through this space. If provisionsare added, they must comply with applicable requirements of state law and the Internal Revenue Code.

Article IX

1. The grantor agrees to provide the trustee with all information necessary to prepare any reports required by section 530(h).2. The trustee agrees to submit to the Internal Revenue Service (IRS) and responsible individual the reports prescribed by the IRS.

Article VI

Article VII

The responsible individual may or may not change the beneficiary designated under this agreement to another member ofthe designated beneficiary’s family described in section 529(e)(2) in accordance with the trustee’s procedures.

Article X

Grantor’s signature Date

Trustee’s signature Date

(Use only if signature of the grantor or the trustee is required to be witnessed.)

Specific Instructions

General InstructionsSection references are to the InternalRevenue Code unless otherwise noted.

Purpose of FormForm 5305-E is a model trust accountagreement that meets the requirements ofsection 530(b)(1) and has been pre-approvedby the IRS. A Coverdell education savingsaccount (ESA) is established after the form isully executed by both the grantor and therustee. This account must be created in the

United States for the exclusive purpose ofpaying the qualified elementary, secondary,

nd higher education expenses of theesignated beneficiary.

Article X. Article X and any that follow mayincorporate additional provisions that areagreed to by the grantor and trustee tocomplete the agreement. They may include,for example, provisions relating to: definitions,investment powers, voting rights, exculpatoryprovisions, amendment and termination,removal of the trustee, trustee’s fees, statelaw requirements, treatment of excesscontributions, and prohibited transactionswith the grantor, designated beneficiary, orresponsible individual, etc. Attach additionalpages as necessary.

Identification Numbers

Definitions

Note: The age limitation restrictingcontributions, distributions, rollover contributions, and change of beneficiary arewaived for a designated beneficiary with

special needs.

Trustee. The trustee must be a bank orsavings and loan association, as defined insection 408(n), or any person who has theapproval of the IRS to act as trustee. Anyperson who may serve as a trustee of atraditional IRA may serve as the trustee of aCoverdell ESA.

Do not file Form 5305-E with the IRS.Instead, the grantor must keep the completedform in its records.

The grantor and designated beneficiary’ssocial security numbers will serve as theiridentification numbers. If the grantor is anonresident alien and does not have anidentification number, write “Foreign” in theblock where the number is requested. Thedesignated beneficiary’s social securitynumber is the identification number of his orher Coverdell ESA. If the designatedbeneficiary is a nonresident alien, thedesignated beneficiary’s individual taxpayer

Designated beneficiary. The designatedbeneficiary is the individual on whose behalfthe trust account has been established.

Responsible individual. The responsibleindividual, generally, is a parent or guardian ofthe designated beneficiary. However, undercertain circumstances, the responsibleindividual may be the designated beneficiary.

Optional provisions in Article V and Article VI. Form 5305-E may be reproduced in amanner that provides only those optionalprovisions offered by the trustee.

Grantor. The grantor is the person whoestablishes the trust account.

Witness’ signature Date

If the model account is a custodial account,see Form 5305-EA, Coverdell EducationSavings Custodial Account.

Family member. Family members of thedesignated beneficiary include his or herspouse, child, grandchild, sibling, parent,niece or nephew, son-in-law, daughter-in-law,father-in-law, mother-in-law, brother-in-law, orsister-in-law, and the spouse of any suchindividual. A first cousin, but not his or herspouse, is also a “family member.”

identification number is the identificationnumber of his or her Coverdell ESA. Anemployer identification number (EIN) isrequired only for a Coverdell ESA for which areturn is filed to report unrelated businessincome. An EIN is required for a commonfund created for Coverdell ESAs.

Article VIII

The Custodian or Trustee may amend this Agreement in any respect (including retroactively) so that the Agreement may conform withapplicable provisions of the Internal Revenue Code (“Code”), or with any other applicable law as in effect from time to time, or to make suchother changes to this Agreement as the Custodian or Trustee deems advisable. Any amendment made to comply with the Code, or applicablelaw, does not require the grantor’s consent. The grantor will be deemed to have consented to any other amendment unless, within 30 daysfrom the date the Custodian or Trustee mails the amendment, the grantor noti es the Custodian or Trustee in writing that the grantor does notconsent and that the Account should be distributed or transferred to another Trustee or Custodian.

Article IX

The Trustee or Custodian may be removed or may resign at any time. As a condition of resignation or removal, a successor Trustee orCustodian shall be appointed, provided that any such successor shall satisfy the requirements of the Code. Upon the successor’s acceptanceof appointment, the assets of the Account(s) shall be transferred to the successor, provided, however, a portion of the Account(s) may bereserved for payment of any liabilities that may constitute a charge against the Account(s). Upon acceptance of appointment, the successorshall be vested with all power of the Custodian or Trustee pursuant to this Agreement. The Custodian or Trustee shall not be liable for theacts or omissions of any predecessor or successor to it. In the event that no successor accepts an appointment, the custodial or trusteed

Account(s) shall be terminated, and the assets of the Account(s), reduced by the amount of any unpaid fees, liabilities or expenses, will bedistributed to the grantor (or following the death of the grantor, the bene ciary).



✂ ESA Trans erI you wish to trans er an existing ESA to Saturna Capital, please complete this page. Attach a copy o your mostrecent statement rom your existing ESA custodian. To trans er an ESA held by a brokerage rm to Saturna BrokerageServices you must also have a Saturna Brokerage Account. Please complete the Brokerage Trans er o Assets ormas well as the Saturna Brokerage Account application.

Mail completed orm(s) and other documents to: Saturna Capital, P.O. Box N, Bellingham, WA 98227-0596

Accepted by: Date:

Description o ESA to be trans erred:

Saturna Account Number (i available):

Primary Social Security or Tax ID Number:

Account Name:

Name o Custodian Firm currently holding your account:

( ) -Custodian Firm’s Phone Number:

Custodian Acceptance:Saturna Trust Co. is willing to accept the assets described herein and credit them to the selected Saturna Capital ESA or which we are Trustee/Custodian. Please liquidate and trans er rom duciary to duciary as authorized above.Mail check to: Education Savings Accounts, Saturna Capital, Box N, Bellingham WA 98227-0596.

Saturna Use Only

Custodian Firm’s Address:

Address:

Account Number:

MEDALLION SIGNATURE GUARANTEE

Allocation:Investment Instructions:❒ Open a new Saturna Capital IRA or me. I have completed

the Saturna ESA Application and enclosed a copy o a recentstatement o the account to be trans erred.

❒ Consolidate my ESAs by depositing proceeds rom thistrans er to my existing Saturna Capital ESA. $ %❒ Sextant Growth or

$ %❒ Sextant International or

$ %❒ Sextant Short-Term Bond or

$ %❒ Sextant Bond Income or

$ %❒ Amana Growth or

$ %❒ Amana Income or

$ %❒ Saturna Brokerage* or*Requires brokerage account.

$ %❒ Sextant Core or

To Current Custodian:

I authorize you to (choose only one option):

❒ Liquidate (sell) ALL Assets ❒ Liquidate (sell) PART

❒ Trans er ALL shares in kind*

❒ Trans er PART or o shares in kind*

o ( und name or symbol)

to the Saturna Capital ESA I have established with Saturna TrustCompany (EIN 26-3918998), a quali ed Non-Bank Trustee underIRS Regulation 1.401-12(n). Please identi y to Saturna the amount o contributions made or the current year (i any).

Note: Liquidation or rollover/trans er is a non-taxable event.Proceeds should be mailed to Saturna Trust Company as Trustee.

*Brokerage account required or non-Saturna mutual unds.

Signature:

Account Owner Date

$

# %

$ %❒ Amana Developing World or



1300 North State StreetBellingham, WA 98225

www.saturna.comToll ree: (800) SATURNA

(800) 728-8762Ph: (360) 594-9900Fax: (360) 734-0755

For automated assistance, including prices:1(888) 732-6262

Saturna no-load mutual funds are

distributed by Saturna Brokerage Services, Inc., a wholly-owned subsidiary of Saturna Capital. Please consider an investment’s objectives,risks, expenses and charges carefully before investing. To obtainprospectuses that contain this and other information about Saturna’s no- load mutual funds, please call (800) SATURNA or visit www.saturna.com.Please read the prospectuses carefully before investing.

ESA-20110101-A

education fund

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