5. Excess Contributions. 

• a. Determining your Excess Contribution. Excess contributions are the contributions to your Roth IRAs for a year that equal the total of: 1.) Amounts contributed for the tax year to your Roth IRAs that are more than your contribution limit for the year. 2.) Any excess contributions for the preceding year, reduced by the total of: a.) Any distributions out of your Roth IRAs for the year, plus b.) Your contribution limit for the year minus your contributions to all your IRAs for the year. NOTE: Do not include amounts that are properly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retirement plan, when determining your excess contributions.
• b. Removing Excess Contributions. For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment only applies if any earnings on the contributions are also withdrawn. The earnings are considered earned and received in the year the excess contribution was made. If you filed your tax return without withdrawing a contribution that you made in the tax year, the IRS allows you to have the contribution returned to you within 6 months of the due date of your tax return, excluding extensions. If you make this withdrawal you can file an amended federal tax return with “Filed pursuant to section 301.9100-2” written at the top. You should also report any related earnings on the amended return and include an explanation of the withdrawal. In general, if the excess contributions for a year aren’t withdrawn by the date your federal tax return for the year is due (including extensions), you will be subject to a 6% tax and other taxes may apply. You must pay the 6% tax each year on excess amounts that remain in your Roth IRA at the end of the tax year. 
• c. Applying excess contributions. If contributions to your Roth IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year, however, your contribution for the later year cannot exceed the maximum contribution allowed for that year. 

6. Distributions. 

• a. Distributions Generally. You can take money out of your Roth IRA at any time. Your withdrawal is subject to a tax penalty if you take a distribution from your Roth IRA before the end of the five-year holding period or you have not attained age 59½ at the time of the distribution. Exceptions apply if you are disabled or meet the qualified first-time homebuyer exception. The five-year holding period rule means that your Roth IRA must be established for at least five years prior to your withdrawal. The five year requirement only needs to be satisfied once and applies to all of your Roth IRAs. Regardless of when you take out your money, you do not pay income tax on the amount of any Roth IRA contribution that you withdraw because Roth contributions are after-tax contributions. You may be taxed, however, when you remove any gains earned on your contributions. If you become disabled you must provide the Custodian written notification of your disability. If you request a distribution and you are disabled, your distributions shall begin forty-five (45) days after receipt of the written notification of your disability. If you are under 59½ a10% tax penalty may apply to any withdrawal from your Roth IRA (in addition to income tax), unless at least one of the following applies: 1.) you are permanently and totally disabled; 2.) the amount is rolled over within sixty (60) days to another Roth IRA; 3.) you remove the money in one of a scheduled series of substantially equal payments over your life expectancy or the joint life expectancies of you and your beneficiary; 4.) you use the money to pay medical expenses that are in excess of 7.5% of your Modified Adjusted Gross Income (MAGI); 5.) you qualify for medical insurance cost exceptions; 6.) you remove money (up to $10,000 total during your lifetime) for the purchase of a primary residence for yourself, your parents, your grandparents, spouse, child or grandchild and the purchaser has not owned a primary residence for two years. Funds withdrawn for the purchase of a primary residence must be used within 120 days for expenses such as financing fees, settlement charges and closing costs; or 7.) you withdraw funds for higher education (college and beyond) qualified expenses including tuition, fees, books, room and board, supplies and equipment. 
• b. Required Minimum Distributions. Roth IRAs do not require withdrawals until after the death of the owner. 
• c. Distributions Under Divorce, Levys and similar Court Directives. In the event that the Custodian is presented with a Court Order to distribute all or part of your Roth IRA due to divorce, Custodian will transfer the assets into a Roth IRA of the receiving spouse. The portion or amount transferred will have no tax implications to you if the Court Order is received and acceptable to the Custodian. The Custodian reserves the right to request additional information from you or your former spouse to carry out such orders. In some instances, such as a levy or a court order, the Custodian may make a distribution from the Roth IRA without instruction from the Account Owner. In those cases, the distribution may be reportable to the IRS as a taxable event. 
• d. Rollovers. A rollover is the distribution of cash or other assets from your retirement plan to you, which you subsequently roll over to another retirement plan. The amount you roll over maintains its tax-deferred status until it is distributed to you. You may take a distribution from part or all of the assets from one Roth IRA and move them to another Roth IRA. The rollover must be completed within sixty (60) days after the day you receive the assets from the first Roth IRA. Generally, Roth IRA assets may be rolled over between Roth IRAs only once a year. This rule applies to each Roth IRA plan you have established. The same property distributed from one Roth IRA) must be rolled over into the new Roth IRA. No tax is paid if the rollover is completed within the sixty (60) days; however, rollovers between Roth IRAs are required to be reported on your federal tax return. If you roll over an amount from one Roth IRA to another Roth IRA, the 5-year period used to determine qualified distributions doesn’t change. The 5-year period begins with the first tax year in which the contribution was made to the initial Roth IRA. Rollovers of distributions from designated Roth accounts (such as your Roth 401(k) account) can be made to your Roth IRA. Once the designated Roth account is rolled into a Roth IRA, the Roth IRA rules apply. For example, the five-year holding period for making qualified distributions is determined independently from the rules under a Roth 401(k) plan, and the special Roth ordering rules determine the taxation of those distributions. Roth IRA distributions can never be rolled into a designated Roth account. Distributions from qualified retirement plans can be rolled over directly to a Roth IRA, subject to rules that apply to rollovers from a traditional IRA into a Roth IRA. For example, a rollover from a qualified retirement plan into a Roth IRA is includible in gross income (the exception would be the amount included that is an after-tax contributions), and the 10% premature distribution tax does not apply. For additional information, you should contact your tax advisor with any questions. You can convert amounts from a Traditional IRA (including SEP and SIMPLE IRAs) to a Roth IRA. If you are age 73 or older, the amount of your RMD from a Traditional IRA also does not count toward the MAGI limit to determine if you are eligible to convert. If eligible, you can withdraw all or part of your Traditional IRA and roll it over into a Roth IRA within sixty (60) days of receipt. You will owe taxes on the portion of the conversion that represents the earnings and contributions distributed from the Traditional IRA that were not previously taxed. A Roth IRA conversion made after January 1, 2018 may not be recharacterized. Prior to that date, recharacterizations were permitted. The amount you convert will be taxable in the year the distribution is made. The 10% penalty tax does not apply to the amount converted. 

7. Recharacterizations.

You may be able to recharacterize certain contributions by recharacterizing a current year regular contribution plus earnings. Please note, beginning in 2018, recharacterizations of conversions made to a Roth IRA are no longer permitted. If you decide by your tax filing deadline (including extensions) of the year for which the contribution was made to transfer a current year contribution plus earnings from your traditional IRA to a Roth IRA, no amount will be included in your gross income if you did not take a deduction for the contribution. You may also recharacterize a current year contribution plus earnings from your Roth IRA to a traditional IRA by your tax filing deadline (including extensions) of the year for which the contribution was made. A regular contribution that is appropriately recharacterized from your Roth IRA to a traditional IRA may be deductible depending upon the deductibility rules previously discussed. In order to recharacterize a regular contribution from one type of IRA to another type of IRA, you must be eligible to make a regular contribution to the IRA to which the contribution plus earnings is recharacterized. All recharacterizations must be accomplished as a direct transfer, rather than a distribution and subsequent rollover. Any recharacterized contribution (whether a regular contribution or a conversion) cannot be revoked after the transfer. 

8. Conversion from a Traditional IRA to a Roth IRA.

You are permitted to make a qualified rollover contribution from a traditional IRA to a Roth IRA. This is called a “conversion” and may be done at any time without waiting the usual 12 months. Beginning in 2018, for conversions made in 2018, you are no longer permitted to recharacterize a conversion made to a Roth IRA back to a traditional IRA. Taxation in Completing a Conversion from a Traditional IRA to a Roth IRA – If you complete a conversion from a traditional IRA to a Roth IRA, the conversion amount (to the extent taxable) is generally included in your gross income for the year during which the distribution is made from your traditional IRA that is converted to a Roth IRA. 

9. Investments. 

• a. No Duty to Review or Monitor Investments. The Custodian shall have no duty or responsibility to review any investment held in the Roth IRA Account or any investment under consideration by the Account Owner or any purchase directed by the Account Owner with respect to any issue, including but not limited to, its safety, risk, suitability or whether or not it should be registered as a security with the appropriate government agencies and shall have no liability with respect to its safety, risk, suitability or whether or not it should be registered as a security with the appropriate government agencies. The Custodian shall not be responsible to investigate or perform any due diligence on any investment, investment sponsor or any principal involved with any investment. Further, the Custodian has no duty to monitor any investment held in the Roth IRA Account. Under this agreement the Custodian provides Custody Services for the assets selected by the Account Owner. Custodian acts on the Investment Directions provided by the Account Owner and has no responsibility for the performance or suitability of the assets selected by the Account Owner. Acting on the Account Owner’s Investment Direction in no way implies endorsement by the Custodian of the assets selected by the Account Owner. The Custodian has no responsibility, authority, or discretion for the selection, purchase, sale, monitoring, or continued holding of any investment in the Roth IRA Account. At its sole discretion, the Custodian can refuse to act as Custodian on any asset selected by the Account Owner. 
• b. Roth IRA Owner Investment Responsibility. The Roth IRA Account Owner has the full responsibility to review and investigate the assets they direct the Custodian to invest in for their Roth IRA account. It is the Account Owner’s responsibility, not the Custodian’s, to select and monitor the investments in the Roth IRA Account. The Roth IRA Owner has the sole responsibility, authority and discretion for the selection of any and all investments in the Roth IRA Account and accepts full and sole responsibility for such selection. Further, the Account Owner is fully and solely responsible for monitoring any and all investments in the Roth IRA Account and accepts full and sole responsibility for the success or failure of such investments. The Custodian has no responsibility, authority, or discretion for the selection, purchase, sale, monitoring, or continued holding of any investment in the Roth IRA Account. It is the Account Owner’s responsibility to investigate and understand the nature of the investments and risks involved with the investments chosen by the Account Owner. 
• c. Pledging Roth IRA Assets. If you use (pledge) a part of your Roth IRA account as security for a loan, that part is treated as a distribution and is included in your gross income. You may have to pay the 10% additional tax on early distributions discussed in item 6.) Distributions above and in IRS Publication 590-B. 
• d. Prohibited Investments. The IRS Code does not permit Roth IRA funds to be invested in life insurance or collectibles. The IRS considers the following items as collectibles: artwork, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages, and certain other tangible personal property. The IRS has indicated that there are some exceptions as noted here: Roth IRAs can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. If you invest your Roth IRA in collectibles, the amount invested is considered distributed in the year invested and you may have to pay a 10% additional tax on early distributions. 
• e. Prohibited Transactions. Generally, a prohibited transaction is any improper use of your Roth IRA account by you, your beneficiary, or any disqualified person. Disqualified persons include members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant). If you or your beneficiary engages in a prohibited transaction in connection with your Roth IRA account at any time during the year, the account stops being a Roth IRA as of the first day of the year in which the prohibited transaction occurs. The Roth IRA Account is treated as distributing all its assets to the Account Owner at their fair market value(s) on the first day of the year in which the prohibited transaction occurs. If the IRA Account ceases to be a IRA because of a prohibited transaction by you or your beneficiary, you may have a taxable gain that is reportable as income. In addition, you or your beneficiary may have to pay other taxes. Some examples of prohibited transactions include buying property within your Roth IRA Account for personal use, using the Roth IRA Account as security for a loan and borrowing money from your Roth IRA. Prohibited transactions are described in Internal Revenue Code (IRC) Section 4975. It is the Account Owner’s responsibility and not the Custodian’s responsibility to determine if a transaction constitutes a prohibited transaction. The Custodian reserves the right to request a certification from the Account Owner that the direction provided by the Account Owner does not create a prohibited transaction, however, if a certification is not requested that does not indicate a transaction is not prohibited. Custodian reserves the right to take any action necessary, within its discretion, which may include resigning from the Roth IRA Account. 

10. Inherited IRAs/Beneficiaries.

Account Owner’s should review and update their Roth IRA account beneficiaries by providing the Custodian with a completed Beneficiary Designation Form. This is especially important after life changes such as marriage, divorce, death, and birth or adoption of children. If you inherit a Roth IRA, you are called a beneficiary. A beneficiary can be any person or entity the Account Owner chooses to receive the benefits of the Roth IRA after he or she dies. Beneficiaries of the Roth IRA must include in their gross income any taxable distributions they receive. 

• a. Inherited From Spouse. If you inherit a Roth IRA from your spouse, you generally have the following three choices. You can do one of the following: a.) Treat it as your own Roth IRA by designating yourself as the Account Owner b.) Treat it as your own by rolling it over into your Roth IRA, or to the extent it is taxable, into a Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (section 403(b) plan), or Deferred compensation plan of a state or local government (section 457 plan). c.) Treat yourself as the beneficiary rather than treating the Roth IRA as your own. If you make contributions (including rollover contributions) to the inherited Roth IRA or if you don’t take the RMD for a year as the beneficiary of the Roth IRA, you will be considered to have chosen to treat the Roth IRA as your own. You will only be considered to have chosen to treat the Roth IRA as your own if: a.) You are the sole beneficiary of the Roth IRA, and b.) You have an unlimited right to withdraw amounts from it. However, if you receive a distribution from your deceased spouse’s Roth IRA, you can roll that distribution over into your own Roth IRA within the 60-day time limit, as long as the distribution isn’t an RMD, even if you aren’t the sole beneficiary of your deceased spouse’s Roth IRA. See Publication 590-B for more information on RMDs. 
• b. Inherited From Someone Other Than Spouse. If you inherit a Roth IRA from anyone other than your deceased spouse, you can’t treat the inherited Roth IRA as your own. This means that you can’t make any contributions to the Roth IRA. It also means you can’t roll over any amounts into or out of the inherited Roth IRA. However, you can make a trustee-to-trustee transfer as long as the Roth IRA into which amounts are being moved is set up and maintained in the name of the deceased Roth IRA owner for the benefit of you as beneficiary. See Pub. 590-B for more information. Like the original owner, you generally won’t owe tax on the assets in the Roth IRA until you receive distributions from it. You must begin receiving distributions from the Roth IRA under the rules for distributions that apply to beneficiaries. Beneficiaries of an inherited Roth IRA must generally begin receiving required minimum distributions by December 31 of the year following the year of the deceased person’s death. 

11. No Tax, Legal, or Investment Advice.

In its role as Custodian, Digital Trust does not provide any tax, legal or investment advice. It is your responsibility as the Account Owner to consult with your investment or tax advisor. The Custodian shall act on the Account Owners directions for transfers, investments and distributions of Fiat when the Account Owner has submitted directions in the manner required by Custodian. The Custodian is not responsible for losses or damages resulting from the delay of acting on a direction if the direction is unclear, incomplete and not in acceptable form to the Custodian. Additionally, the Custodian is not responsible for the performance of the assets selected by the Account Owner. Under this agreement the Custodian provides Custody Services for the assets selected by the Account Owner. Custodian acts on the Investment Directions provided by the Account Owner and has no responsibility for the performance or suitability of the assets selected by the Account Owner.