Know the facts before you borrow

Plan Loans

Beginning January 2, 2004, participants will be able to take loans from their Annuity Fund account.  Some highlights of this feature include:

• Loans are available up to $50,000 or 50% of your account balance, whichever is less.
• Minimum Loan Amount of $1,000.
• Loans for any general purpose are available for a term of up to 60 months.  You are free to use this loan for what ever you like, the Fund puts no restrictions on use.
• Loans for purchase of a principal residence are available for up to 120 months.
• Only one outstanding "general purpose" and one "principal residence" loan allowed at any time.
• Loans will incur interest at the Prime Interest Rate (as listed in the Wall Street Journal) plus 1%.  This interest is money you pay back to your own Annuity Fund account and will be available upon your retirement, or when you decide to take another loan or hardship withdrawal (subject to Plan rules).
• Loans will be initiated with Fidelity Investments via their Voice Response System or Phone Representatives at (866) 84-UNION or via Fidelity NetBenefits at http://www.fidelity.com/atwork.
• You make loan payments directly to Fidelity via Loan Coupons (check) or electronically via Electronic Funds Transfer.
• The fees associated with initiating a loan are a one-time $35.00 initiation fee and $3.75 quarterly maintenance fee.

It is important to note that if you fail to repay a loan in accordance with the payment schedule, the entire unpaid amount of the loan will be treated as a taxable distribution from the plan.  It will be subject to all applicable income taxes, as well as being subject to a 10% early withdrawal penalty if you are under age 59 1/2.  Also, if you default on an Annuity Fund loan, you are prohibited from obtaining a loan in the future.

Hardship Withdrawals

Also beginning January 2, 2004, participants will be able to take a hardship distribution from their Annuity Fund account.  Federal regulations require the Trustees to only offer this feature for contributions received on and after January 1, 2004.  This means that only "new money" deposited to your account and earnings on these contributions will be available for a hardship distribution.  Furthermore, these withdrawals are designed to be used as a "safety net" for participants and their families.  There are detailed rules about what they can be used for and when they can be made.  Specifically, you are only permitted to take a hardship withdrawal after exhausting all your other options under the Plan.  This means that if you are eligible to take a Plan loan (as described in the above section) to satisfy your financial need, you must do so before applying for a hardship distribution.  Other important highlights of this feature include:

• Available only from contributions made to your account after January 1, 2004, along with earnings on these contributions.
• Available only in the event of the following financial needs considered heavy and immediate:

• Medical & related expenses
• Costs directly related to purchase of a principal residence of the participant (excluding mortgage payments)
• Payments necessary to prevent eviction from the participant's principal residence or foreclosure on the mortgage of that residence
• Payments of tuition, related educational fees and room and board expenses for the next 12 months of post-secondary education of the participant, his/her spouse or dependants

• All other means of obtaining the needed funds, including loans, have been exhausted prior to applying for a hardship distribution.
• Hardship withdrawals are initiated with Fidelity Investments via their Voice Response System or with a Phone Representative at (866) 84-UNION.

A hardship distribution is considered a permanent and taxable distribution from the Plan.  Any hardship distribution taken from the Plan may not be repaid back into the Plan.  The amount withdrawn is subject to income taxes and may also be subject to a 10% early withdrawal tax in the year taken.  Federal income taxes of 20% will be withheld from the distribution amount.

Both of these provisions have been added to the Plan to provide you with greater access to your account in the event of financial need.  Please note that the primary purpose of the Annuity Plans is to provide income during your retirement and therefore we strongly encourage you to utilize these provisions only when absolutely necessary.