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b. t am not subject to backup withholding because (I) I hove not been nodded by the Interna! Revenue Service that i am subject to backup withholding as 0 result of a. failure (0 report all interest or dividends, or (it) the IRS has notified me (bat lam no longer subject to backup withholding. (Cross out item *b», if you have been notified by the IRS that you are subject to
Welcome fo Vanguard!
g CHECKWRIT1NG OPTION
SUBJECT TO CONDITIONS ON REVERSE SIDE
t/We apply for die privilege of writing checks against this Vanguard Fund account. I/We guarantee the genuineness of each signature and understand this request is subject to conditions on reverse side.
ALL REGISTRANTS (MINORS NOT ACCEPTED) MUST SIGN HERE:
(exactly as you will sign checks)
Signature of Owner, Trustee, Etc.
. Social Security Number or Employer ID Number
Signature of Joint Owner, Co-trustee, Etc.
Social Security Number or Employer ID Number
Indicate Number of Signatures Required on Checks
(Unless a number is indicated, only one signaiutewili be required on chocks.1
Source: The Vanguard Group
266 Part II: Establishing a Great Fund Portfolio
• If you should die, the entire account balance goes to the other person registered on the account without the hassles and expense of going through probate.
A rarely used option is to register the account as “tenants in common.” To arrange a tenancy in common, you can have a legal document drawn up specifying that each tenant owns a certain percentage of the account. Unlike shares of ownership for joint tenants with rights of survivorship, the shares for tenants in common need not be equal. If you die, the account is restricted; your share of the account is distributed to the person whom you selected to receive it, and the surviving account holder is required to set up a new account for his or her share.
If you go to the trouble of setting up the account registration as tenants in common, just write in the margin in this section of the form that you want the account set up this way, or attach a short letter that presents the same request. The fund company doesn’t want or need to see the legal document which you should keep with your will or other important personal financial documents.
v* Gift or Transfer to Minor. If you want to open an account in your child’s name, check the second box. As the parent, you are the custodian; your child is the minor. Your state’s name is necessary because two different sets of laws govern custodial accounts: the Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act (UTMA). Each state allows one or the other. The hitch: Your child is legally entitled to the money in the account when he or she reaches the so-called age of majority (which is, depending on the state, between the ages of 18 and 21). Please read the college investing section in Chapter 3 before putting money into your child’s name.
v0 Trust. Generally, you know if you have a trust because you’re either the one who sets it up or you are the recipient of assets that are part of a trust. There are many types of trusts. For example, some folks, by the time they get older, have set up a living trust that allows their assets to pass directly to heirs without going through probate. If you have a trust agreement, provide the pertinent details at this point in the form.
v* Corporation, Partnership, or Other Entity. If you want to open a mutual fund account for your corporation, local rotary club, or whatever, use this registration section. You need a taxpayer ID number. If your organization doesn’t have one, call the IRS at % 800-TAX-FORM and request Form SS-4.
2. Your Address. This part’s EZ. You may be wondering why they ask for your phone numbers, the name of your employer, and your occupation. The fund company wants your phone numbers so that it can call you if needed regarding an account issue. The rest of this information is partly required by
Chapter 11: Application, Transfer, and Other Neat Forms
fund regulators and partly just desired by the fund company for their own “market research”; they want to know about the people who invest in each of their specific types of funds. If you wish to maintain your privacy, you can skip this stuff and the fund company will still happily open your account. (Note: The fund company does not share this information with the IRS.)
3. Your Investment. Here’s where you tell ’em which fund you want. But be careful here. In the example at the beginning of this section, the person was interested in the money market fund, which is the first line in the left column. On the line, simply write the amount you want to deposit.
To ensure that the money is deposited into the correct fund, check the account statement that you receive when you open your account. Although it doesn’t happen often, fund companies (and you!) occasionally make mistakes.
4. Your Method of Payment. Generally, you need to send a check to open your account. Make it payable to the fund (include the fund number if the company numbers its funds as Vanguard does). Don’t worry about someone stealing the check or a mail thief cashing it (remember that you make the check payable to the fund). Alternatively, you could open this account by exchanging money from another account that you already have at the company, in this case, at Vanguard.