Introduction
Saving for the future
isn’t always the easiest thing to do. Sometimes just keeping up with your
day-to-day expenses can be an effort. But, the best time to start planning for
the future is right now. That’s why the Company offers the Savings Plan to help
make saving for retirement convenient and easy.
Take a look at the
“At-A-Glance” chart on the next page that highlights the features of your
Savings Plan. You’ll find more detailed information throughout the rest of this
summary plan description (SPD).
Your Savings Plan At-A-Glance
|
Plan Provision |
Highlights |
Details on Page... |
|
Eligibility |
Nonrepresented employees are eligible to participate immediately. Represented employees are eligible upon completion of one year of service. |
3 |
|
Your Contributions |
When you participate in the plan, you can contribute from 1% to 14% of your eligible pay (in whole percentages) up to the maximum allowed by law. Your contributions are taken automatically each pay period through convenient payroll deductions. |
5 |
|
Tax Advantages |
When you save through the plan, you can make contributions on a before-tax basis, an after-tax basis or a combination of both. When you contribute on a before-tax basis, deductions are made from your eligible pay directly to the plan before any federal, state or local income taxes are taken. You defer paying taxes on those contributions until you receive that money in the future. |
5 |
|
Company Matching
Contributions |
The Company matches your contributions with 50¢ for every dollar you save, up to the first 6% of your eligible pay after you complete 12 months of service with 1,000 or more hours of service. |
6 |
|
Company Incentive
Contributions |
Depending on the Company's financial results for the year, the Company may make an additional incentive contribution to the plan. |
7 |
|
Investment Options |
The plan allows you to decide how you want to invest your contributions. You can choose from seven individual investment funds and three pre-diversified funds (life style funds). If you are a nonrepresented employee, you can also choose from hundreds of mutual funds through the T. Rowe Price TradeLink® brokerage window option. |
10 |
|
Changing Your
Investments |
You can change the amount of your contributions or how your money is invested as often as you like. In addition, you may even be able to access a portion of your account balance while you are still actively employed through a loan, dividend pass through or, in certain situations, a hardship withdrawal. |
15 |
|
Vesting |
Your account is vested immediately. |
9 |
We encourage you to read
this entire summary plan description (SPD). By becoming familiar with how the
plan works, you will be able to make the best decisions to prepare for your
financial future.
Eligibility
Nonrepresented
employees are eligible to participate in the Savings Plan immediately upon
being hired. Represented employees are eligible to participate upon completion
of a year of service in which they worked 1,000 hours. When you are eligible to
participate you may contribute on either a before-tax or after-tax basis. For
more details about who is considered an eligible employee, please refer to the
term “employee” at the end of this section, under “Terms You Should Know.” All
employees are eligible for the Company match after completing one year of
service, with at least 1,000 hours worked.
Enrolling in the Plan
You will receive a Savings Plan enrollment kit shortly before your
eligibility date. This kit is distributed by T. Rowe Price Retirement Plan
Services, Inc., the Savings Plan’s record keeper.
|
What You Need To Do… |
Description |
|
To Enroll |
To enroll in the plan, you must call a T. Rowe Price
representative at 1-800-922-9945
between |
|
Choose Your |
This is the amount that will be deducted from each of your paychecks. You can save anywhere from 1% to 14% of your pay, in whole percentages. You can contribute on a before-tax basis, an after-tax basis, or a combination of both, but the total you save cannot exceed 14% and no more than 9% can be contributed on a before-tax basis. Remember, the Company matches half of your contributions up to the first 6% of pay you save after you complete 12 months of service with 1,000 or more hours of service. |
|
Choose Your |
This is how your new contributions will be invested. You may choose to direct your contributions into one or more of the options available through the Savings Plan, in 10% increments. The total of your investment mix must always equal 100%. |
The First Time You Call T. Rowe Price…
For more information
about the automated system and how to request changes to your Savings Plan
account through T. Rowe Price, please see “Keeping In Touch with Your Account”
on page 25.
Automatic Enrollment (Effective Mid-Year 2000 for Nonrepresented Employees)
If you are a
nonrepresented employee and you do not call T. Rowe Price to open your account
during your first 30 days of employment, you will be automatically enrolled in
the plan. A 3% before-tax contribution, directed to the Retirement
Strategy—Balanced Fund, will be established for you and a deduction taken from
your next paycheck.
If you do not want to
participate, or if you would like to elect a different contribution level or
investment fund(s), contact T. Rowe Price during your first 30 days of
employment.
Designating a Beneficiary
You must complete a
beneficiary election form to indicate who will receive your money if you die
while you’re participating in the plan. Your election form should be sent to T.
Rowe Price in the envelope provided with the enrollment kit. See page 28 for details about naming a beneficiary.
Contributions to the Plan
Your Contributions
You can contribute from
1% to 14% of your eligible biweekly and incentive pay on a before-tax basis, an
after-tax basis or a combination of both. Your contribution must be in whole
percentages, with a combined total of no more than 14%, and no more than 9% can
be on a before-tax basis.
The Advantages of Before-Tax Contributions
When you save with
before-tax dollars, you get an income tax break. Your contributions do not
count as current income on your tax return, which means you do not pay current
income taxes on what is set aside in the plan. As a result, you defer paying
federal and, in some cases, state and local income taxes on your Savings Plan
contributions until you withdraw them or receive a distribution from the plan.
Your account earnings are also free from taxation until distribution. Please
note that you do pay Social Security taxes on before-tax contributions, so your
earnings for Social Security purposes are not affected.
Example
Let’s assume Mark lives in
|
|
Before-Tax |
After-Tax |
|
Mark’s Eligible Pay |
$60,000 |
$60,000 |
|
Social Security (FICA) |
-$4,590 |
-$4,590 |
|
6% Before-Tax
Contribution |
-$3,600 |
-$0 |
|
Taxable Income |
$51,810 |
$55,410 |
|
Federal and State
Income Tax |
-$5,699 |
-$6,095 |
|
Mark’s Income After
Taxes |
$46,111 |
$49,315 |
|
6% After-Tax
Contribution |
-$0 |
-$3,600 |
|
Take-Home Pay |
$46,111 |
$45,715 |
|
Tax Deferral |
$396 |
$0 |
Please note: This is
only an example. It does not include local income tax. Your actual savings will
vary, based on your marital status, income tax filing status, exemptions and
deductions.
Defining Your “Eligible Pay”
For purposes of the plan,
your eligible pay refers to the
earnings you receive from the Company during the Plan Year (January 1 to
December 31). Eligible pay includes biweekly base pay, lump sum salary planning
award and, if you are a nonrepresented employee, annual incentive compensation.
For more details, please refer to the definition of “eligible pay” in the
“Terms You Should Know” section at the end of this document. In addition, the
IRS imposes a limit on the amount of your compensation that may be used in
determining your contributions to the plan. This amount, which is adjusted from
time to time to reflect inflation, is $170,000 in 2000.
Company Contributions
The Company contributes
to your account through both fixed matching contributions and incentive
contributions, as described below:
Company Matching Contributions
As an incentive for you
to save through the plan, the Company contributes on a biweekly basis
50 cents for every dollar you save during that period, up to the first 6% of
your contributions if you’ve completed a year of service. Contributions over 6%
receive no Company match.
The Company match is
deposited to your account each pay period and is automatically invested in the
Sempra Energy Stock Fund.
Example
Let’s assume Jill earns $1,500 biweekly and contributes 9% of her pay on a
before-tax basis to the plan. The plan calculates the match like this:
|
|
Jill’s Contributions |
Matching Contributions |
|
The first 6% of Jill’s contribution equals $90. |
$90 |
$45 |
|
The next 3% of Jill’s contribution equals $45. |
$45 |
$0 |
|
Total contributions |
$135 |
$45 |
With
the Company match, Jill’s $135 biweekly contribution becomes $180 ($135 + $45) before it’s even
invested! If Jill makes no change in her biweekly savings election, over the 26
pay periods during the year, she will save $3,510 and the Company will add
another $1,170 to her account, for a total savings of $4,680 for just her
regular biweekly earnings. She may also make contributions from her incentive
award and will receive the regular Company match on the first 6% contributed.
Of course, if Jill varies her biweekly elections, or her pay rate changes, both
the Company contribution and her total savings before investing will also change.
Incentive Contributions
In addition to the
Company fixed matching contribution, the Company also shares its financial
success with eligible plan participants. Depending on the Company’s financial
performance during the year, you may receive an incentive contribution to
your plan account of up to 1% of your eligible pay. You must be employed on the
last day of the Plan Year and in an eligible category of employees to be
eligible to receive an incentive contribution.
If you are not
participating in the Savings Plan by making regular biweekly contributions, you
will still be eligible to receive the incentive contribution. An account will
be established for you and the incentive contribution will be deposited into
your Company stock account.
Please note that the
incentive contribution is discretionary. That means the Company will decide,
year to year, whether or not to make an incentive contribution, depending on
its financial performance that year. Additional contributions will be made as
soon as practically possible following the decision of the Board of Directors
that goals have been met and a contribution should be made.
Rollover Contributions
The Savings Plan allows
you to roll over any taxable cash
distribution you receive from another qualified plan (except rollovers from a
403(b) plan) sponsored by a previous employer or from a conduit Individual
Retirement Account (IRA). A conduit IRA is one that exclusively contains money
you received from a qualified plan and which has not been combined with money
from other sources.
You are not required to
make regular payroll-deducted contributions to the plan in order to make a
rollover contribution. However, your rollover contribution will not receive any
Company matching contributions. You are always 100% vested in your rollover
contributions and the corresponding investment earnings.
To make a rollover into
the plan, or for more information, call T. Rowe Price at 1-800-922-9945 and
speak to a representative. You will need to complete a “Rollover Contribution
Transmittal Form,” which will ask you to direct your incoming rollover
investment among the plan’s investment funds.
Savings Limits
The IRS places the
following restrictions on contributions to the Savings Plan:
n The amount of before-tax contributions you can
make each calendar year is limited to a specific dollar amount. This amount,
which the IRS adjusts from time to time to reflect inflation, is $10,500 in
2000. If your before-tax contributions
reach the annual limit, and you have not yet reached the annual compensation
limit of $170,000 in 2000, your payroll deductions may continue on an after-tax
basis. If you’ve completed a year of service, you will continue to receive
Company matching contributions on your after-tax contributions for the remainder
of the year. Your contributions and the associated Company matching
contributions stop completely when you reach the annual compensation limit.
Contributions automatically resume the following January 1st
n The maximum annual additions to your Savings Plan
account—including your before-tax contributions, Company matching contributions
and incentive contributions—is 25% of your annual compensation or $30,000,
whichever is less. The $30,000 limit is also adjusted from time to time by the
IRS to reflect inflation
n There is also a limit on the amount of your
compensation used in determining your contributions to the plan. This amount,
which is also adjusted from time to time by the IRS to reflect inflation, is
$170,000 in 2000
n To ensure that the plan is used by a balanced
proportion of employees at lower and higher pay levels, the IRS could place
further restrictions on the amount higher paid employees may contribute to the
plan. You will be notified if this applies to you.
Vesting
Vesting means “ownership.” You are always vested in your contributions and the
investment earnings on them (including rollover contributions), meaning that
you can take them with you no matter when or why you leave the Company. You are
also immediately vested in all Company contributions to your Savings Plan
account.
Years of Service
A year of service means a consecutive, 12-month period in which you
work at least 1,000 hours measured from your employment-date and subsequent
anniversaries. You become eligible to receive Company contributions to your
account after completing one year of service.
Your Investment Options
Although
saving on a regular basis is the first step to a healthy financial future,
investing your contributions wisely can make a world of difference.
You may build your own
portfolio by investing in any one or more of the investment options offered
through the Savings Plan. You may invest in the funds in 10% increments.
The individual
investment funds can be categorized into three groups: Stability, Income and Growth. In general, the
greater the risk, the greater the potential return. Each investment fund
represents different kinds of investments and has a different objective.
Therefore, each fund offers a distinct level of risk and reward potential. If
you need help choosing the investment funds that best meet your financial
goals, you should consult a professional financial advisor.
In addition to the individual investment options, the Savings Plan also
offers three pre-diversified Retirement
Strategy Fund options and if you are eligible, the opportunity to invest in
hundreds of mutual funds through the T. Rowe Price TradeLink® brokerage window
option. Following are descriptions for
each of the funds offered through the plan.
|
Investment Fund/ Description |
Objective |
Invests in |
Risk/ |
|
Stability (Individual Investment Funds) |
|||
|
T. Rowe Price Summit Cash Reserves Fund |
Preservation of capital, liquidity and income. |
High-quality money market securities. |
The fund seeks to maintain a stable share price of $1, although it cannot guarantee this. The fund is neither insured nor guaranteed by the FDIC or the U.S. government. |
|
T. Rowe Price |
Stability of principal value and competitive income. |
Investment contracts issued by high-quality insurance companies and banks (as rated by T. Rowe Price). |
The fund seeks to maintain a stable unit value of $1, although it cannot guarantee this. The fund is neither insured nor guaranteed by the FDIC or the U.S. government. |
* The Stable Value Fund is not a mutual fund. It is a common trust fund under Maryland banking law, and its securities are exempt from registration under the Securities Act of 1933.
|
Investment Fund/ Description |
Objective |
Invests in |
Risk/ |
|
Income (Individual Investment Funds) |
|||
|
Fidelity U.S. Bond |
The highest level of income over the long term consistent with preservation of capital. |
At least 80% of its total assets in income producing securities included in the Lehman Brothers Aggregate Bond Index. |
Because the fund has the ability to invest in longer-term securities which are more vulnerable to changes in interest rates, its share price may be more volatile than that of a fund investing solely in short-term securities. |
|
Growth (Individual Investment Funds) |
|||
|
T. Rowe Price Equity |
To match the total return performance of the U.S. equity market. |
All 500 stocks that compose the S&P 500® Index2. |
This fund will be subject to the same degree of fluctuation as the broad U.S. stock market, and it may be more volatile than a fund that can shift assets into stocks based on market conditions or in response to trends in market sectors. |
|
Fidelity Select International Fund |
To provide consistent superior returns above the Morgan Stanley Capital International Europe, Asia, Far East benchmark while maintaining similar fundamental characteristics. |
This fund's strategy, developed in 1989, is a risk-controlled strategy designed to deliver stock-pricing capabilities to the Institutional marketplace. |
The approach combines active stock selection with quantitative risk control in all major equity markets. |
1 Formerly known as the Equity Index Fund.
2 S&P 500 is a trademark of McGraw-Hill, Inc., and has been licensed for use by T. Rowe Price Trust Company. This fund is not sponsored, endorsed, sold or promoted by S&P, and S&P makes no representation regarding the advisability of investing in the Equity Index Trust.
|
Investment Fund/ Description |
Objective |
Invests in |
Risk/ |
|
Growth (Individual Investment Funds) |
|||
|
T. Rowe Price Small-Cap Stock Fund |
Long-term capital growth. |
A diversified group of small and medium companies. |
This fund involves more risk than a fund investing primarily in large, established companies. In addition, since this fund employs a growth approach to small-cap investing, it involves more price volatility than is associated with larger companies or the broad market averages. |
|
Sempra Energy |
|||