Table of Contents

1. What is a 401(k) plan?
2. What are the benefits of the plan?
3. How much do I have to contribute?
4. Why should I start contributing now?
5. Where does my money go from my paycheck?
6. How do I get my money out of the plan?
7. Can I still contribute to an IRA?
8. What do I need to do to get started?
9. How much will my account be worth?
10. What type of monthly benefit would this provide at age 65?
11. Summary of benefits
12. Investment choices

A 401(k) is an employee benefit program that allows you to contribute a portion of your taxable pay to a retirement account that grows on a tax deferred basis. Both you and Sysdyne are able to make contributions to this plan to establish a retirement benefit for you. The deferrals that you make are taken automatically from your paycheck and deposited into a retirement account in your name. It is an easy and convenient way to plan for your financial future.

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There are several ways that the plan will benefit you:

• The money that you put into the plan will lower your taxable wages. This will result in an immediate tax savings for you.
   
• The money that you put into the plan grows on a tax-deferred basis. That means that you do not have to pay taxes on the growth in your account until you take the money out.
  
  
• Another benefit of the 401(k) is that it is a convenient way to save for your retirement. The dollars that you defer are taken automatically out of your paycheck (with your written authorization). You choose the amount you want to save and that's all there is to it.
  
  
• Also as an added bonus, Sysdyne matches a portion of the amount that you defer.
  
  
• With a 401(k) program it is also possible to contribute more to the plan than you could contribute to an IRA.
  
  

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You can now defer up to 100% of your income. (Contact Sysdyne for information regarding the federally mandated maximum for this year)

The amount that you contribute is totally up to you. You can contribute the amount that best fits in with your budget. It is necessary for you to make deferrals to take advantage of the Sysdyne matching funds.

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There is a very dramatic effect on your retirement benefit if you wait to begin funding your 401(k) plan. Assume an employee age is 30, currently making $30,000 per year. If this employee would choose to save $2,400 per year (8% of compensation) and save that amount each year for the next 35 years, that employee would have an account worth $437,148 (assuming an 8% rate of return).

Let's look at what happens if that same employee waits until age 35 to start the exact same plan. His/her account balance at age 65 would be $285,588. Even though the employee would only contribute $12,000 less to the plan, their retirement account would be worth $151,560 less at age 65. This is a very compelling reason to start your 401(k) plan as soon as possible.

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The funds that are taken out of your paycheck are deposited into the investment accounts you select. The money that you put in is always your money, it never belongs to Sysdyne.

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The plan spells out several ways that you can take money out of the plan:

1. You terminate employment and request a distribution.

2. You reach normal retirement age.

3. You become disabled.

4. You have special hardship or education needs.

5. You can make a loan for any reason.

6. The plan is terminated.

The plan also allows for in-service withdrawals. Your beneficiary will receive the funds you have in the plan if you were to die.

It is important to remember that any money you put into the plan may be subject to income taxes and possible penalty when the funds are removed.

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You will still be able to make an IRA contribution. Depending on your income, that contribution may not be deductible.

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If you wish to participate in the plan you need to fill out an application form and send it to Sysdyne indicating the amount (a percentage) that you want deducted from your paycheck. There will also be a form for you to designate your beneficiary, and your investment selections.

BENEFIT OF TAX-DEFERRED GROWTH

A $1,200 annual contribution to a 401(k) plan for 35 years will have a value of $218,574. (Based on 8% interest compounded semiannually). The same amount placed in an after tax retirement account (based on a 28% tax bracket) will have a value of $131,195 after 35 years.

The tax-deferred growth allowed in the 401(k) account corresponds to a benefit that is $87,379 more at retirement.

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Assume a participant who is age 35, and is contributing $2,400 per year to their 401(k) account. This participant's total contribution would be $72,000. The value of the 401(k) account at age 65 would be $285,588.

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Monthly Withdrawals for 10 years:

$3,464 per month.

Monthly Withdrawals for 20 years:

$2,388 per month.

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SUMMARY OF BENEFITS

The amount contributed to a 401(k) plan is determined by the individual employee. The employee can choose how much or how little to contribute, and have the flexibility to make changes in their deferral amount. This feature gives you control over your financial future.

Very simply, the plan allows you to have a systematic and convenient way to save. You elect in writing the amount that you want to save. The rest is handled by Sysdyne. Every time you are paid, the amount you elected is taken from your check and placed in your retirement account.

Because the funds you defer are going to your 401(k) plan, you do not pay state or federal taxes on the amount you defer. This will lower your taxable income, so you should see a tax savings.

Tax-deferred growth is an excellent benefit. What this means is that your investment, and any amount your employer matches, grows without the need to pay taxes right now. This lets all of your money accumulate and grow so you receive a much larger benefit at retirement. You pay the taxes on the plan assets as you take the money out.

The 401(k) plan now allows you to save up to 100% of your pay (Contact Sysdyne for the maximum allowed deferral for this year.) You may have the ability to contribute more to this plan than to an IRA.

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ADVANCED CAPITAL GROUP / T. ROWE PRICE  INVESTMENT CHOICES

1. MONEY MARKET - T. Rowe Price Stable Value

2. INTERMEDIATE BOND - T. Rowe Price New Income

3. CORPORATE HIGH YIELD - T. Rowe Price High Yield

4. LARGE VALUE - T. Rowe Price Equity Income

5. LARGE GROWTH - T. Rowe Price Growth Stock

6. MID VALUE - T. Rowe Price Mid-Cap Value

7. MID GROWTH - T. Rowe Price Mid-Cap Growth

8. SMALL VALUE - T. Rowe Price Small-Cap Value

9. SMALL GROWTH - AIM Small Cap Growth/A

10. INTERNATIONAL - T. Rowe Price Intl Growth & Income

11. INTERNATIONAL - Oppenheimer Intl Small Co/A

12. BOND INDEX - T. Rowe Price US Bond Index

13. LARGE BLEND INDEX - T. Rowe Price S&P 500

14. SMALL BLEND INDEX - T. Rowe Price Ext Market Index

15. INTL INDEX - T. Rowe Price Intl Equity Index

16. BALANCED - T. Rowe Price Balanced Fund

17. RESERVE - T. Rowe Price Prime Reserve

Please see the T. Rowe Price for prospectus information on these funds.

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