Participation agreement
Each term used but not defined in this Participation Agreement has the meaning given to it in the Program Disclosure Statement. By completing the online application, you (either as the Account Owner/Beneficiary, or as the Authorized Legal Representative on behalf of the Account Owner/Beneficiary, as applicable) agree to all the terms and conditions in the Program Disclosure Statement, this Participation Agreement, and the online application. This Agreement is entered into between you and the California ABLE Act Board (the “Board”), acting as trustee of the California ABLE Program Trust (the “Trust”) and the administrator of California’s 529A Qualified ABLE Program (“CalABLE”). This Agreement becomes effective when CalABLE opens the Account.
I hereby agree, represent, and warrant to the Board, as follows:
1. Legal Contract
I acknowledge that this Participation Agreement that I am entering into represents a legal, valid, and binding contract between the Board and me.
2. Information about CalABLE
I have read and I understand the Program Disclosure Statement, this Participation Agreement, and the online application. In making the decision to open the Account, I did not rely on any representations or other information, whether oral or written, other than the information in the Program Disclosure Statement, this Participation Agreement, or the online application. I acknowledge that I have been given the opportunity to obtain answers to all of my questions concerning CalABLE, the Account, the Program Disclosure Statement, this Participation Agreement, and the online application.
3. Changes in Law
I understand that CalABLE is established and maintained by the state of California pursuant to the Enabling Law and is intended to qualify for certain federal income tax benefits under Section 529A. I acknowledge that qualification under Section 529A is vital and that CalABLE may be changed by the state of California and the Board at any time if it is determined that such change is required to maintain qualification under Section 529A. I also acknowledge that CalABLE is subject to California and federal laws, and that such laws are subject to change for any reason, sometimes with retroactive effect, and that neither the state of California, the Trust, the Board, CalABLE, nor any of CalABLE’s service providers (including the Program Manager) makes any representation that such laws will not be changed or repealed or that the terms and conditions of CalABLE will remain as currently described in Program Disclosure Statement, this Participation Agreement, or the online application.
4. CalABLE Modifications
I understand and agree that the Board reserves the right, upon written notice and without my consent, to modify CalABLE and this Participation Agreement, as deemed necessary by the Board in its sole discretion and subject to applicable law, for reasons such as, but not limited to, ensuring compliance with California or federal laws, or ensuring the proper administration of CalABLE. I further agree that the Account will be subject to all such modifications.
5. Accuracy of Information Provided by Me
I represent and warrant that I accurately and truthfully completed the online application and that any other documentation or information related to the Account that I provide to CalABLE in the future will be true and correct.
6. Additional Documentation Requested from Me
I acknowledge that in connection with opening the Account, and prior to processing any Account transactions or changes requested by me after the Account is opened, CalABLE may ask me to provide additional documentation, and I agree to promptly comply with any such requests.
7. Indemnification by Me
I recognize that the establishment and maintenance of the Account will be based on the statements, agreements, representations, and warranties made by me to CalABLE. I agree to indemnify the state of California, the Trust, the Board, CalABLE, CalABLE’s service providers (including the Program Manager), and any officials, directors, officers, employees, agents, representatives, subcontractors, affiliates, subsidiaries, and instrumentalities of the foregoing, from and against any and all loss, damage, liability, and expense (including the costs of reasonable attorneys’ fees), to which such persons may incur by reason of, or in connection with, any misstatement or misrepresentation made by me; any breach by me of the acknowledgments, representations, warranties, or agreements contained in the Program Disclosure Statement, this Participation Agreement, or the online application, or as otherwise given by me in connection with the Account; or any failure by me to fulfill any covenants or obligations in connection with the Account. I agree that all of my statements, representations, warranties, and agreements shall survive the termination of this Participation Agreement and this indemnification shall remain enforceable against me, notwithstanding the termination of this Participation Agreement.
8. Purpose of the Account
I represent the Account is being opened to save for Qualified Disability Expenses of the Beneficiary. I acknowledge that there is no guarantee that contributions and investment returns, if any, in the Account will be sufficient to cover the Qualified Disability Expenses of the Beneficiary.
9. Eligible Individual Status
I certify that the Beneficiary is an Eligible Individual as described in the Program Disclosure Statement, and that I have, and agree to provide upon request, evidence of such eligibility.
10. One Account Rule
I represent that the opening of the Account does not violate the One Account Rule, as described in the Program Disclosure Statement.
11. Contributions
I acknowledge that the ability to make contributions to the Account is subject to the annual Standard Contribution limit (including the annual ABLE to Work Contribution limit, to the extent applicable), the Maximum Account Balance, and all other terms and conditions related to contributions described in the Program Disclosure Statement, including with respect to Excess Contributions.
12. Changes to Account Information, including Eligibility
I agree to promptly notify CalABLE of any changes to the information maintained by CalABLE for the Account, including changes in the Beneficiary’s status as an Eligible Individual.
13. Authorized Legal Representative
If I am acting as an Authorized Legal Representative on behalf of the Beneficiary, I represent that I have full power and authority to open the Account on behalf of the Beneficiary and to enter into this Participation Agreement. In addition, if I am acting as an Authorized Legal Representative, I represent that I neither have nor will acquire any beneficial interest in the Account during the lifetime of the Beneficiary, and that I must administer the Account for the benefit of the Beneficiary.
14. Account Authority
I acknowledge that only I may authorize transactions on behalf of the Account (unless in the future such authority is duly transferred to another, as described in the Program Disclosure Statement) including, but not limited to, transactions related to (i) the investment of contributions; (ii) transfers between Investment Options (as permitted by applicable law); (iii) withdrawals; and (iv) changes in the Beneficiary.
15. No Investment Direction
I acknowledge that all investment decisions for CalABLE will be made by the Board. Although I must select the Investment Option(s) in which contributions to the Account are to be invested, I acknowledge that I cannot directly or indirectly select the investments for the Investment Options, and that an Investment Option’s investments may be changed at any time by the Board. I also acknowledge that contributions and earnings (if any) invested in an Investment Option may be transferred to another Investment Option only twice per calendar year, as described in the Program Disclosure Statement.
16. No Investment Advice or Suitability Assessment
I acknowledge that neither the state of California, the Trust, the Board, CalABLE, nor any of CalABLE’s service providers (including the Program Manager) has provided me with, and will not provide, any investment advice or suitability assessment regarding the Account or any Investment Option.
17. Investment Risks
I understand the risks related to investing in CalABLE, as discussed in the Program Disclosure Statement. I understand that I can lose money by investing in CalABLE. I understand that there are no assurances that I will not suffer a loss of any amount invested in my Account or that I will receive a particular return on any amount in my Account.
18. Guarantees
I acknowledge that, other than an investment in (or a portion of an investment in) the FDIC-Insured Portfolio, which is insured by the FDIC subject to the limitations described in the Program Disclosure Statement and by applicable law, neither contributions nor earnings allocated to an Investment Option are guaranteed or insured by any person or entity. I understand that there is no guarantee that any Investment Option’s or any underlying mutual fund’s investment objective will be achieved. I acknowledge that there is no minimum guaranteed interest rate for the FDIC-Insured Portfolio.
19. Not an Investor in Underlying Investments
I understand that I am not, by virtue of an investment in an Investment Option, a shareholder in, or the owner of any interests in, such Investment Option’s underlying investments. I understand that CalABLE is the owner of the shares of any mutual fund in which an Investment Option invests, and that I will have no right to vote or direct the voting of any proxy with respect to such shares.
20. Withdrawals
I understand that once a contribution is made to the Account, my ability to withdraw funds without adverse tax consequences is limited. I acknowledge these restrictions and potential tax liabilities are described in the Program Disclosure Statement. I further acknowledge the terms and conditions related to withdrawals described in the Program Disclosure Statement.
21. Termination
I understand and agree that the Board may at any time terminate CalABLE and/or this Participation Agreement, either of which may cause a distribution of the entire Account balance to be made from the Account. I understand the potential tax liabilities, including additional taxes on earnings (if any), that may apply to any such distribution. I understand that I may cancel this Participation Agreement at any time by written notice to CalABLE and requesting a complete withdrawal of the Account balance.
22. Medicaid/Medi-Cal Recapture
I acknowledge and understand the potential for Medicaid/Medi-Cal recapture upon the death of the Beneficiary, as described in the Program Disclosure Statement.
23. Tax Records
I acknowledge that, for tax reporting purposes, I am responsible for retaining adequate records related to the Account.
24. Transfer of Ownership
I understand that if the Beneficiary for the Account changes, the former Beneficiary will cease to have any right, title, claim, interest in, or authority over the Account.
25. No Collateral for Loans
I acknowledge that the Account and any portion thereof cannot be used as collateral for any loan and that any attempt to do so shall be void.
26. Assignments
I acknowledge that I may not assign or transfer any interest in the Account except as provided in the Program Disclosure Statement and as permitted by applicable law. I acknowledge that any other attempted assignment or transfer of such interest shall be void.
27. Duties and Rights of California Entities and Service Providers
Neither the state of California, the Board, the Trust, CalABLE, nor any of CalABLE’s service providers (including the Program Manager), nor any officials, directors, officers, employees, agents, representatives, subcontractors, affiliates, subsidiaries, or instrumentalities of the foregoing has a duty to perform any action other than those specified in the Program Disclosure Statement, this Participation Agreement, or the online application (“Program Parties”). All Program Parties (i) may accept and conclusively rely on any instructions or other communications reasonably believed to be from me or an Authorized Legal Representative, (ii) may assume that the authority of any Authorized Legal Representative continues to be in effect until they receive written notice to the contrary, and (iii) are beneficiaries or third-party beneficiaries of, and can rely upon and enforce, any of my agreements, representations, warranties, acknowledgments, and similar statements in this Participation Agreement. None of the Program Parties has a duty to determine or advise me of the investment, tax, or other consequences of my actions, of their actions in following my directions, or of their failing to act in the absence of my directions.
28. Changes to Service Providers
I acknowledge that CalABLE’s service providers (including the Program Manager) will not necessarily continue in their roles for the entire period that the Account is open and that additional and/or different service providers may be retained for CalABLE in the future. I acknowledge that if there is a change in CalABLE’s service providers, there may be modifications to CalABLE and the Account.
29. Headings
The headings used in this Participation Agreement are for ease of reference only and have no legal significance.
30. Controlling Law, Venue, and Jurisdiction
This Participation Agreement is governed by California law without regard to principles of conflicts of law. Subject to the provision in this Participation Agreement titled “Arbitration,” I agree and submit that any post-arbitration claim or controversy arising out of, or relating to, this Participation Agreement shall be adjudicated by a federal or state court located in the state of California, and I hereby submit to the exclusive jurisdiction of any such California court.
31. Severance
In the event that any clause or portion of the online application, the Program Disclosure Statement, or this Participation Agreement is found to be invalid or unenforceable, at the option of the Board or CalABLE, this Participation Agreement may be deemed void, or that clause or portion found to be invalid will be severed from the applicable document and the remainder thereof will continue in full force and effect as if such clause or portion had never been included.
32. Sovereign Immunity
Nothing in the online application, the Program Disclosure Statement, or this Participation Agreement shall be deemed or construed as an express or implied waiver
33. Account Protection
It is solely your responsibility to protect your Account, diligently monitor all transactions in it, and to protect the security of your Account credentials and the email account associated with your Account. You should use multi-factor authentication as one way, but not the only way, to minimize the risk of unauthorized transactions in your Account. You are also solely responsible for updating your Account with your current contact information and keeping your Account profile current at all times while you participate in the Plan. If you notice a transaction in your Account that you did not make or authorize, it is your responsibility to contact the Plan immediately. Any delay or failure in reporting any unauthorized transactions could affect the ability to recover funds from any unauthorized transaction and could result in a partial or total loss of your Account. The Plan, along with the Program Manager, its parent company, and affiliates, will not be responsible for any losses that are caused in whole or in part by your failure or negligence in monitoring or protecting your Account or timely reporting any potential unauthorized transactions to us. Accounts in the Plan are not savings accounts, demand deposit accounts, or any other type of accounts for purposes of the Electronic Funds Transfer Act, 15 U.S.C. §§ 1693 et seq., Regulation E, 12 CFR Part 1005, et. seq., the Consumer Financial Protection Act, the federal or any state Uniform Commercial Code or any similar state, federal or local consumer protection law ("Consumer Law"). Withdrawals or other distributions from your Account with the Plan are also not electronic fund transfers within the meaning of Consumer Law.
33. Complaint Resolution Process
Should a dispute arise between an Authorized Legal Representative or Beneficiary and any of the Plan, the Program Manager, the Investment Advisor and/or the Custodian, or their respective affiliates, officers, directors, employees and agents (collectively, the “Plan Parties”) related to the Beneficiary’s Account or other Plan matters, the Beneficiary and/or Authorized Legal Representative should first contact the Program Manager to attempt resolution within 60 days of the dispute arising. The Beneficiary and/or Authorized Legal Representative and the Plan Parties shall attempt to resolve the dispute through direct discussions in a spirit of mutual cooperation.
If a resolution cannot be reached after good-faith discussions, the parties hereby establish the following out-of-court alternate dispute resolution procedure. First, the parties will submit to non-binding mediation to address the dispute. The parties will meet within the State of California or upon the mutual agreement of all parties will meet via virtual means. The parties will mutually determine the duration and process for any such mediation effort and be bound by the terms and conditions as set forth in any settlement agreement that is executed following the mediation. The Plan Parties may participate in the mediation, if warranted.
Adjudication of any disputes that cannot be resolved through the mediation process shall be resolved by arbitration as described in the “Arbitration Provision” below.
Arbitration Provision. You agree that, if both good-faith discussions and subsequent mediation fail to produce a resolution and further adjudication is necessary, the sole and exclusive remaining forum and remedy for resolution of any Claim no matter how described, pleaded or styled, shall be final resolution by binding individual arbitration conducted by either the American Arbitration Association ("AAA") under its Consumer Arbitration Rules or by the Judicial Arbitration and Mediation Services (“JAMS”) to be held at a location within the State of California or to be held virtually upon agreement by both parties. If neither AAA nor JAMS can provide arbitration services, the parties may agree on another arbitration administrator. This arbitration agreement is made pursuant to a transaction involving interstate commerce, and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16.
Solely as used in this Arbitration Provision:
“Claim” includes any past, present, or future claim, dispute, or controversy involving you (or persons claiming through or connected with you), on the one hand, and the Plan or any of its service providers, including (but not limited to) the Program Manager, on the other hand, relating to or arising out of your Account, the Program Disclosure Statement, the Participation Agreement, your usage of the Account, or access to funds in the Account, transactions involving the Account, and/or any related activities or relationships that involve, lead to, or result from the foregoing, including the validity or enforceability of this Arbitration Provision, the Program Disclosure Statement, the Participation Agreement, or any parts thereof. Claims are subject to arbitration regardless of whether they arise from contract, tort (intentional or otherwise), a constitution, statute, common law, or principles of equity, or otherwise. Claims include matters arising as initial claims, counterclaims, cross-claims, third-party claims, or otherwise. Please note that you may continue to assert Claims in small claims court, if your Claims qualify and so long as the matter remains in such court and advances only on an individual (non-class, non-representative) basis. The scope of this Arbitration Provision is to be given the broadest possible interpretation that is enforceable.
Plan service providers includes, but is not limited to, the Program Manager and each of its successors, affiliates, or assignees as well as any third party using or providing any product, service, or benefit in connection with an Account.
ARBITRATION OF ANY CLAIM IS BINDING AND MANDATORY. NEITHER YOU NOR THE PLAN/PLAN SERVICE PROVIDERS WILL HAVE THE RIGHT TO LITIGATE A CLAIM THROUGH A COURT. IN ARBITRATION, NEITHER YOU NOR THE PLAN/PLAN SERVICE PROVIDERS WILL HAVE THE RIGHT TO A TRIAL BY JUDGE OR JURY.
IF YOU DO NOT AGREE TO THE TERMS OF THIS ARBITRATION AGREEMENT, DO NOT OPEN OR USE AN ACCOUNT IN THE PLAN.
The parties will have every remedy available in arbitration as they would have from a court and will be entitled to reasonable discovery. All determinations as to the scope, interpretation, enforceability, and validity of the Program Disclosure Statement and Participation Agreement shall be made finally and exclusively by the arbitrator. The arbitrator’s award will be binding and final. Judgment on the arbitration award may be entered in any court having jurisdiction. In addition, unless otherwise required by applicable law, in the event that this Arbitration Provision is found not to apply to you or your Claim, the parties agree that any judicial proceeding (other than small claims actions) will be brought in the federal or state courts within the State of California.
If the Plan or its service providers initiate arbitration, they will pay the administrator's filing costs and administrative fees (other than hearing fees). If you initiate arbitration, filing costs and administrative fees (other than hearing fees) will be paid in accordance with the rules of the administrator selected, or in accordance with countervailing law if contrary to the administrator's rules.
Each party will bear the expense of its own attorneys' fees, except as otherwise provided by law or the Program Disclosure Statement and Participation Agreement. If a statute gives you the right to recover any of these fees, these statutory rights will apply in the arbitration notwithstanding anything to the contrary herein.
NO CLASS ACTION, OR OTHER REPRESENTATIVE ACTION, OR PRIVATE ATTORNEY GENERAL ACTION, OR JOINDER OR CONSOLIDATION OF ANY CLAIM WITH THE CLAIM OF ANOTHER PERSON SHALL BE ALLOWABLE IN ARBITRATION, EVEN IF THE CLAIM OR CLAIMS THAT ARE THE SUBJECT OF THE ARBITRATION HAD PREVIOUSLY BEEN ASSERTED (OR COULD HAVE BEEN ASSERTED) IN A COURT AS CLASS REPRESENTATIVE OR COLLECTIVE ACTION IN A COURT.
Unless consented to in writing by all parties to the arbitration, no party to the arbitration may join, consolidate, or otherwise bring claims for or on behalf of two or more individuals or unrelated corporate entities in the same arbitration unless those persons are parties to a single transaction. Unless consented to in writing by all parties to the arbitration, an award in arbitration will determine the rights and obligations of the named parties only, and only with respect to the claims in arbitration, and will not (i) determine the rights, obligations, or interests of anyone other than a named party, or resolve any Claim of anyone other than a named party or (ii) make an award for the benefit of, or against, anyone other than a named party. No administrator or arbitrator will have the power or authority to waive, modify, or fail to enforce this section, and any attempt to do so, whether by rule, policy, arbitration decision or otherwise, will be invalid and unenforceable. Any challenge to the validity of this section will be determined exclusively by a court and not by the administrator or any arbitrator.
This Arbitration Provision will survive: (i) the termination of the Plan or your Account; (ii) the bankruptcy of any party; and (iii) any transfer of your Account, or any amounts owed in relation to your Account, to any other person or entity. If any portion of this arbitration provision is deemed invalid or unenforceable, the remaining portions shall nevertheless remain in force. Any different agreement regarding arbitration must be agreed to in writing.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE A RIGHT TO LITIGATE CLAIMS THROUGH A COURT BEFORE A JUDGE OR JURY BUT ARE HEREBY KNOWINGLY AND VOLUNTARILY WAIVING THAT RIGHT BY AGREEING TO THIS AGREEMENT AND ARBITRATION PROVISION.
