Sprinkler Industry Supplemental Pension Fund

8000 CORPORATE DRIVE       ●       LANDOVER, MARYLAND 20785

TELEPHONE

(301) 577-1700                                                                   

TOLL FREE

(800) 638-2603

January 15, 2010

To:       All Participants in the Sprinkler Industry Supplemental Pension Plan (“SIS Pension Plan”)

From:   The Board of Trustees

As of January 1, 1999, the Trustees of the SIS Pension Plan adopted a prospective change to the Plan that, among other things, has allowed the Trustees to be somewhat more flexible in the distribution rules of the SIS Pension Plan for that part of the Plan assets contributed on and after January 1, 1999.  Using this added flexibility, last January, a rule was added to the SIS Pension Plan that allowed for distributions from the plan to those who were facing foreclosure or eviction from their home.  As of this writing, more than 1,000 distributions have been made under that rule. 

At the time of the implementation of that rule, it was hoped that the economic downturn would be brief.  Unfortunately, unemployment remains high and economic difficulties appear not to be at an end.  Many have benefited from the added flexibility of the January 2009 hardship rule.  However, many others faced financial hardships that did not meet the narrow requirements of that rule which were imposed on the Plan by the Internal Revenue Code.  Many still face financial hardships related to the current economic troubles.  With this in mind, The Board of Trustees announce that the SIS Pension Plan of benefits has been amended to permit distributions, this year and next year, more broadly than has ever before been permitted.  This rule affects only that portion of a participant’s SIS Pension Fund account that is attributable to contributions (and investment income on contributions) made for work on and after January 1, 1999.  Under the Internal Revenue Code, distributions from the SIS Pension Plan before the 1999 change are never permitted before the participant separates from covered employment.

Temporary Rule Allowing Distributions during the Economic Downturn

Effective February 1, 2010, participants with the consent of their spouses, if applicable, may apply for and receive distributions from the SIS Pension Plan.  Application under this rule must be made before December 31, 2011.  Distributions under this rule will be made only as a lump sum and are limited to no more than one such distribution in any 180 day period.  Additionally, the amount available for distribution is limited as follows:

For individuals whose first contribution to the SIS Pension Plan was five or more years before the date of their application, they may apply for no more than 75% of their individual account value as of February 1, 2010 that was attributable to contributions for work after 1998. 

For individuals whose first contribution to the SIS Pension Plan was less than five years before the date of their application, they may apply for no more than 75% of their individual account value as of February 1, 2010 that was attributable to contributions made more than 24 months before the date of the application. 

For everyone, the amount that can be paid out during the entire period this benefit is available is limited to an amount that is 75% of the Participant’s Individual Account available for distribution under this rule as of February 1, 2010.

Applying participants will be charged $100 for each distribution in order to defray the costs of processing applications under this rule.  The charge will be paid by reducing each distribution by $100. 

Money you receive under this rule will be taxable under the Internal Revenue Code and a 10% federal tax penalty will apply to distributions under this provision of the SIS Pension Plan for anyone under the age of 59 ½.  You should also be aware that 20% of the distribution made to you will be withheld and submitted to the IRS as federal income tax withholding.  The amount of tax actually owed may be greater than the amount withheld.  Of course there will continue to be no tax penalty on distributions before the age of 59 ½ made under the Retirement provision of the SIS Pension Plan.

If you need to consider a distribution from your SIS Pension Fund account, you can contact the Fund Office at the above address or phone numbers.  You will be sent an application for this benefit.  In addition, an application for this benefit will be available on the SIS Pension Fund page of the www.nasifund.org website. 

The Trustees encourage you to avoid withdrawing money from your SIS Pension Fund account before retirement.  Nevertheless, they understand that sometimes, the immediate need is so great as to make an early distribution necessary. 

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