| Sargent & Lundy Savings Investment Plan |
| SIP NEWSLETTER - SPRING 1997 |
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SARGENT & LUNDY SAVINGS INVESTMENT PLAN The Piggy Bank for Grown-Ups TABLE OF CONTENTS: Your SIP Window To The World For those of you with access to the Internet, please note that the Savings Investment Plan now has its own Home Page. The Home Page will be updated on the 1st business day of the week, after the fund rates of return have been calculated through the previous Friday and will include any other changes or additions during the past week. The Home Page is intended to provide access to information not currently available to many plan participants. Until now, only employees in the Chicago office and several field sites could access the S&L cc:mail SIP bulletin board. Now, any plan participant with access to the Internet can obtain the same SIP information as those in the office. The SIP Home Page currently includes the following: * News - not only the latest rates of return, but excerpts from various newspapers and magazines which may be of interest to you or your family. These articles or announcements will, after an appropriate period of time, be deleted or moved to "Archives". * SIP Library - the SIP Plan Booklet is the only item currently listed. Future updates will add the SIP Committee's Investment Policy Statement, the SIP Plan Document, and past issues of the SIP Newsletter. * Resources - these are direct links to other home pages which provide information that may be helpful, such as retirement planning programs and the Internal Revenue Service. Others will be added in the future. * How To - this section provides information on transfers, loans, IRAs, transaction deadlines and QDROs (in the case of divorce). * Mailbox - there is a direct link to the two SIP Administrators (depending on the configuration of your PC), and a listing of the SIP Committee members. * Archives - these are excerpts from magazines and newspapers previously posted on the Home Page, or on the SIP cc:mail bulletin board which are still applicable. * Investments - direct links to the home pages of mutual fund companies which have funds offered by the plan. Mutual fund companies not listed do not yet have a home page to access. Whether you are sitting at home in your favorite chair or visiting your
local library, come see us on the Web: http://www.slchicago.com/sip On January 1, 1997, the plan's trustee, Harris Bank, transferred its defined contribution and defined benefit trustee services for benefit payments to Citibank. This has created some difficulties for those requesting checks from the Savings Investment Plan: * Since the benefit payment section of Citibank is located in Tampa, Florida all checks are mailed from there and will take longer to arrive. They will also take longer to "clear", so take this into account when accessing the withdrawal check you have deposited. * The check format used by Citibank does not have a normal "check" appearance. The check looks like a burst-apart form, on blue paper, with the Citibank return address. More than a few participants have thrown away an expected check, thinking it was junk mail. * Although Citibank is working with the U.S. Postal Service to improve
its check format, the current style of check does not travel well through
the postal system. If you receive a check that has been damaged and cannot
be cashed by your bank, please return the check to the SIP Office and we
will authorize a replacement check. The previous newsletter (Fall '96) listed the different categories of plan participants, the number of participants in each and the percentage of the total participants that each category represented. Listed below is a breakdown of the investment fund amounts for each category, and the percentage each represents, as of March 31, 1997: Full Time Employees (1,223) Stable Asset - $1,814,900 - 50% Part Time Employees (19) Stable Asset - $172,899 - 28% Former Employees < Age 55 (619) Stable Asset - $14,103,190 - 49% Retirees & Beneficiaries (468) Stable Asset - $34,350,029 - 67% S&L - Related Companies (36) Stable Asset - $291,563 - 39% Divorced Spouses (10) Stable Asset - $231,707 - 57% TOTAL ASSETS BY INVESTMENT FUND (2,499) Stable Asset - $98,684,271 - 51% TOTAL ASSETS BY CATEGORY New International Fund On April 1, 1997, the American National Bank InterCap fund was closed and the assets were transferred to the plan's three new international funds in equal proportions: Berger International Mutual Fund T. Rowe Price International Stock Fund Warburg, Pincus Institutional International Equity Fund These three funds were selected instead of a single fund to reduce risk through diversification among different managers and different investment methodologies. Check Your Checks The SIP Office is having difficulty with some of the many checks received each month. If you are going to make a lump sum contribution or a monthly loan payment, apply for a new loan or payoff an existing loan, please remember the following: * Checks should be payable to "Sargent & Lundy SIP Trust" * Checks should include your Social Security number * Monthly loan checks (for non full-time employees) MUST be for the EXACT payment only. The IRS stipulates that each loan payment be of equal value, except for the final amount. This means that you CANNOT "round off" the amount or make multiple payments with one check. * If, as a non full-time employee, you wish to make several payments
at one time, please send a separate check for each month along with the
applicable coupon. Each check will then be deposited for the appropriate
month. If you are not in the Chicago office, PLEASE call the SIP Office before you send a letter requesting a change, a withdrawal, or total distribution of your account. We, the SIP Administrators, need to discuss your change or withdrawal with you, to be sure that "what you want is what you get." For example, you send a letter requesting a withdrawal of $1,000. Do you know if there are any penalties resulting from the withdrawal? Do you know how much of this, if any, is going to be reported as additional income? Do you know if federal tax needs to be withheld, and if so how much? Is the $1,000 that you need, before any tax is withheld or after? Will your payroll deductions be suspended? For example, you want to transfer funds in your account. Do you want to rebalance the entire account or simply move money from one fund to another? Does this change also affect the investment of your future contributions? You may not work at S&L any longer, but what about the loan payment you make each month? For example, what if your change request does not arrive in the mail by the deadline? There are many reasons why we need to talk with you. When you call,
we will complete the change/ withdrawal/ termination form at that time.
A copy will then be sent to you as confirmation. We will also, then, request
a brief letter, fax, cc:mail, etc., of authorization. Many of you have after-tax money in your accounts but are not sure how much is available for withdrawal, what would be taxed, and when is it available to you. Any funds you may have in the four after-tax accounts are available for withdrawal for any reason. But the answers to tax questions and penalties depends on which category you are withdrawing from. Every quarter, you receive a "cover page" with your account statement. The center of the page provides information similar to the following: SIP Basic Post-86-Net Contributions $ 100.00 SIP Voluntary Post-86 Net Contributions $635.00 SIP Basic Pre-87 Net Contributions $12,000.00 SIP Voluntary Pre-87 Net Contributions $27,480.00 The first thing to know is that the dates refer to the Tax Reform Act (TRA) of 1986. Withdrawal calculations are based on when after-tax contributions were made into your account: after TRA-86 ("post-86") or before ("pre-87"). Any contributions deposited into your account prior to January 1, 1987 (the TRA-86 effective date) were "grandfathered" . This means that these contributions can be withdrawn tax free, for any reasons, without withdrawing the earnings. Any contributions deposited into your account after January 1, 1987 cannot be withdrawn "contribution only". The earnings must also be withdrawn, on a proportional basis. In the first example on the previous page, the contribution of $100 represents 67% of the $150 total in the account. Therefore, a $50 withdrawal would come from both the tax-free contribution ($33.50) and earnings ($16.50). Order of Withdrawal The Tax Reform Act of 1986 stipulates that money be withdrawn in a specific sequence (refer to #1 - #4 below): SIP Basic Post-86-Net Contributions $ 100.00(3) SIP Voluntary Post-86 Net Contributions 635.00(2) SIP Basic Pre-87 Net Contributions 12,000.00(1) SIP Voluntary Pre-87 Net Contributions 27,480.00(1) #1 - Pre-87 Contributions are withdrawn first, and are completely tax free. Since all taxes were paid at the time the deductions were made, you will never be taxed again. Please note that these contributions are not eligible to be rolled over into an IRA or another employer's qualified plan. #2 - Post-86 Voluntary withdrawals must include both contributions and earnings, proportionally. The earnings are subject to taxes unless rolled over (see following section). #3 - Post-86 Basic withdrawals must include both contributions and earnings, proportionally. The earnings are subject to taxes unless rolled over (see following section). #4 - Pre-87 Earnings are withdrawn last, and are subject to taxes unless rolled over (see following section). Tax Options Although your withdrawal may require you to take taxable earnings out of your account, you may select one of the following: a) You may take the earnings as additional income. There is a mandatory 20% federal tax withholding for any taxable amount > $200. You should consider this with- holding when determining the total amount of your withdrawal, to be sure the actual check amount is what you expect. In addition to the 20% federal tax withheld, a 10% penalty may be due when you file your tax return. (For further information, see the SIP Office or the Tax Notice included with your account statement each quarter). b) You may roll over the earnings into an IRA or another employer's qualified plan. While this defers any tax obligation, it means your total amount withdrawn from the plan will be greater than the amount you need, so that the actual tax-free amount of the withdrawal is what you expect. But you are simply transferring the taxable assets from one retirement plan to another, not withdrawing them. Rollovers, Employer Match and 401(k) The withdrawal provisions for these types of money will be included in the Summer '97 newsletter. Spring 1996 |
This page updated on 6/20/97