December 11, 2000
PERSONAL AND CONFIDENTIAL
TO: [NAME]
All Supplemental Executive Retirement Plan Participants
Who Elected the Account Benefit Formula
Under the Ralston Purina Retirement Plan
RE: Lump Sum-Payment Option
As a participant in the Ralston Purina Company Supplemental Executive Retirement
Plan ("SERP"), you may be entitled to benefits from the SERP which you would
have accrued under the Ralston Purina Retirement Plan, but for certain IRS
imposed limits. The normal form of payment of benefits from the non-qualified
SERP is an annuity, even if your Ralston Purina Retirement Plan benefit is
determined under the Account Benefit formula. The SERP was amended effective
December 1, 1999 to allow an election of a lump-sum payment from the SERP of
benefits determined under the Account Benefit formula.
To receive your SERP benefit in a lump sum when you retire or terminate
employment for any reason, you must have on file a valid and aged lump sum
election. DUE TO IRS RULES GOVERNING NON-QUALIFIED PLANS, A LUMP-SUM ELECTION
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WILL BE EFFECTIVE ONLY IF (I) IT HAD BEEN MADE BY DECEMBER [31], 1999 OR, (II)
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IT IS IN PLACE FOR AT LEAST ONE YEAR PRIOR TO YOUR TERMINATION. IF EITHER OF
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THESE REQUIREMENTS IS NOT SATISFIED WITH RESPECT TO A REQUEST FOR A LUMP-SUM
PAYMENT FROM THE SERP AT THE TIME ANY SERP BENEFIT PAYMENT IS TO COMMENCE, YOU
MUST RECEIVE AN ANNUITY FORM OF PAYMENT OF YOUR SERP BENEFITS.
YOU CURRENTLY [HAVE THE FOLLOWING ELECTION IN PLACE, DATED OR NO ELECTION FORM
IN PLACE] IF NO VALID LUMP SUM ELECTION IS IN PLACE AT THE TIME BENEFITS ARE
TO COMMENCE, YOUR SERP BENEFITS WILL BE PAID TO YOU IN AN ANNUITY FORM. IF YOU
WISH TO CHANGE YOUR PAYMENT OPTION ELECTION OR FIRST ELECT A PAYMENT OPTION
FORM, COMPLETE THE ENCLOSED RETIREMENT OPTION ELECTION FORM. YOUR ELECTION MAY
BE CHANGED AT ANY TIME UP TO ONE YEAR PRIOR TO THE COMMENCEMENT OF YOUR
RETIREMENT BENEFITS FROM THE SERP.
Note: The one-year waiting period is not applicable to any payment elections
regarding distributions from the tax qualified Ralston Purina Retirement Plan
because of IRS rules governing such plans. These elections may be made up until
the date of retirement, or termination of employment, as appropriate.
Tax Considerations:
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- Lump-sum payments from a non-qualified retirement plan such as the SERP
cannot be rolled over. They are subject to the mandatory 28%
withholding of Federal income tax. State or local taxes may also be
withheld, as applicable.
- The elimination of the taxable wage base ceiling for purposes of the
Medicare Health Insurance (HI) tax portion of FICA requires that Medicare
HI tax be withheld from all compensation when earned, determinable and
not subject to risk of forfeiture, even if payment is deferred.
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In addition to other required deductions that will be taken at that time,
you should be aware of the manner in which the Medicare HI tax will be
handled. At the time your benefits from the SERP are determinable
and become payable, Medicare HI tax withholding is required.
Medicare HI tax is withheld at the rate of 1.45% from the employee
payment whether or not your SERP benefits are paid in a lump sum or
annuity form. If paid in an annuity form, the tax is withheld at the
time of the first payment, based on the present value of the
annuity. The employer is also required to deposit 1.45% Medicare HI
tax.
<PAGE>
PAGE 2 - LUMP SUM PAYMENT OPTION ELECTION 2001
- There may be other personal tax considerations associated with your
decision to elect a lump-sum distribution from the SERP. You should seek
advice from your personal tax counselor before completing this
Form.
Enclosed is a Retirement Option Election Form - Supplemental Executive
Retirement Plan. If you wish to make a new election complete the enclosed form
and return it to us. When you return the form you will receive confirmation of
your election. If you fail to receive a confirmation you should contact us to
ensure your election form was received. If the above lump sum election
requirements are not satisfied, you will be able to elect to receive your SERP
benefits only under one of the annuity option forms offered by the Plan.
If you have any questions, please contact me at 314-982-2746.
Sandra J. Donahue, Director,
Retirement Plans
Enclosure
<PAGE>
RALSTON PURINA COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OPTION ELECTION FORM
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PARTICIPANT NAME (PRINT OR TYPE) SOCIAL SECURITY NUMBER
____ SINGLE ____ MARRIED
------------------------------------ -----------------------------
STREET ADDRESS MARITAL STATUS
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CITY STATE ZIP DATE
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PARTICIPANT SIGNATURE
======================
You may elect to receive your retirement benefit from the Supplemental Executive
Retirement Plan under the options shown below. Because of IRS rules, an
election for a lump-sum distribution can only apply to payments determined under
the ACCOUNT BENEFIT formula made one year prior to termination or retirement.
If you die before benefits start, the option elected will not be effective and
any payments made will be in accordance with the provisions of the Ralston
Purina Supplemental Executive Retirement Plan governing death benefits.
YOU MAY CHANGE YOUR ELECTION AT ANY TIME. HOWEVER, IF YOU ELECT A LUMP-SUM
DISTRIBUTION, TO BE EFFECTIVE YOUR ELECTION MUST BE IN PLACE FOR AT LEAST A YEAR
PRIOR TO TERMINATION OR RETIREMENT. AN ELECTION FOR ANY FORM OF ANNUITY
DISTRIBUTION MAY BE MADE AND/OR CHANGED AT ANY TIME PRIOR TO COMMENCEMENT OF
BENEFITS.
I elect to receive my retirement benefits from the Supplemental Executive
Retirement Plan in the following form: (I understand that the lump
sum-distribution form can only apply if I am enrolled in the ACCOUNT BENEFIT
formula, and the election form is in place at least one year prior to
termination or retirement.)
____ 1) Five-Year Certain Option
____ 2) Ten-Year Certain Option
____ 3) Life Annuity Option
____ 4) _______ % Contingent Annuitant Option
____ Social Security Adjustment Option (Applies only if benefits commence
prior to age 62. This option may only be elected in conjunction with
one of options 1-4 above.)
5) Lump-Sum Distribution
THIS OPTION IS ONLY AVAILABLE TO PARTICIPANTS WHOSE BENEFIT UNDER THE
RALSTON PURINA RETIREMENT PLAN IS DETERMINED UNDER THE ACCOUNT
BENEFIT FORMULA. A lump-sum distribution can be made only if this
form is completed and submitted at least one year prior to
termination or retirement.
I designate the following as my:
____ Beneficiary under Options 1), 2), or 5) above
____ Contingent Annuitant under Option 4) above
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NAME OF BENEFICIARY OR CONTINGENT SOCIAL SECURITY NUMBER OF
ANNUITANT BENEFICIARY OR CONTINGENT
ANNUITANT
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RELATIONSHIP OF BENEFICIARY OR BIRTH DATE OF
CONTINGENT ANNUITANT BENEFICIARY OR CONTINGENT
ANNUITANT
THIS FORM APPLIES ONLY TO YOUR BENEFITS UNDER THE RALSTON PURINA SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN. A SEPARATE OPTION ELECTION AND BENEFICIARY
DESIGNATION FORM MUST BE COMPLETED FOR YOUR BENEFITS UNDER THE RALSTON PURINA
RETIREMENT PLAN. THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN IS A
'NON-QUALIFIED' PLAN AND THEREFORE BENEFIT PAYMENTS ARE NOT SUBJECT TO CERTAIN
FAVORABLE TAX TREATMENT PROVIDED TO QUALIFIED PLAN PAYMENTS. PLEASE CONSULT
YOUR TAX ADVISOR BEFORE COMPLETING.
MAIL COMPLETED FORM TO: FAX TO:
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RALSTON PURINA COMPANY
ATTN: RETIREMENT DEPARTMENT, 1A OR (314) 982-3270
CHECKERBOARD SQUARE
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ST. LOUIS, MO 63164
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