Indianapolis Recorder, Indianapolis, Marion County, 25 January 2002 — Page 28

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THE INDIANAPOLIS RECORDER

FRIDAY, JANUARY 25,2002

Celebrating over 100 years of Black history

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Federal Home Loan Bank provides $1.3 million for area projects

Special to The Recorder The Federal Home Loan Bank of Indianapolis (FHLBI) has announced $1.3 million in grants that will provide quality affordable housing for 86 Indianapolis area families and individuals. The FHLBI, which serves as a wholesale bank to community lenders throughout Indiana and Michigan, has announced the latest round of grants from its Affordable Housing Program (AHP). The program provides grants to partnerships involving local financial institutions — FHLBI member banks — and not-for-profit organizations that develop improved housing for lower-income families, senior citizens and people with disabilities. AHPenables many families to own their own homes for the first time. Overall, $14 million in new grants will help support 65 projects in the two states, of which 43 are rental and 22 are home-ownership developments, providing 2,302 units of affordable housing. Included are five projects in the In-

dianapolis area, and several other statewide projects that will have local components. Area projects include: • Westside Community Development Corp. Home Ownership and Repair. This $450,000 grant, through National City Bank of Indianapolis, will help support home ownership opportunities through new home construction on vacant lots for sale to first-time home buyers and assisting existing owneroccupant senior households in repairing their homes. Both activities will take place within the near Westside of Indianapolis that includes the neighborhoods of Haughville, Hawthorne and Stringtown. • IRL Development Corp., FourCounty Down Payment Assistance. The goal of this $500,000 grant, in partnership with National City Bank, is to assist at least 15 households to purchase their homes and to assist 10 existing owner-occu-pant households in repairing their homes. Sixty-four percent of the

units will be targeted to seniors and persons with disabilities. The project, which will focus on Marion, Hancock, Shelby and Rush counties, combines the FHLBI grant with funding from the City of Indianapolis, the USDA Rural Development Program and the Indiana Housing Finance Authority to create additional opportunities for independent residential living services. • Riley Area Development Corp. Home Ownership and Repair. The $176,000grant, in partnership with First Indiana Bank, Indianapolis, covers two activities; providing home ownership opportunities through rehabilitation of the vacant Hoosier Building into eight condos for sale to first-time home buyers and assisting eight existing owner-occupant senior households in repairing their homes. Both activities will take place in the St. Joseph neighborhood, near downtown Indianapolis. The vacant Hoosier Building has long been an eyesore on Massa-

chusetts Ave. and a hindrance to efforts to revitalize the neighborhood. The Hoosier renovation adds to the stock of affordable owneroccupied housing in Marion County, and ensures that downtown residential options remain open to low-income families. • Habitat for Humanity Hamilton County (HfHHC). Utilizing, in part, an $80,000AHP grant through Star Financial Bank, of Anderson, HfHHC plans to build 10 homes in Hamilton County over the next two years on scattered sites. The homes will be sold at no profit to 10 families who meet specific criteria. To qualify, applicants must have been Hamilton County residents for the past year; must meet financial guidelines; and must have housing that is currently inadequate due to size, cost or physical limitations. In addition, applicants must work 250sweat equity hours building their home or someone else’s home or doing community work. • Sycamore Services Inc., Rental Rehabilitation. Sycamore Services’

Hendricks County project, in partnership with National City Bank, will make use of an $80,000 grant to provide five units of affordable housing in Danville. Four of the units will be two-bedroom units. AHP grants are awarded on a competitive basis and have been used for home ownership and rental housing in both urban and rural areas throughout Indiana and Michigan since 1990. These subsidies are used in many ways, including seed money for construction, reducing interest rates on loans, helping with down payment requirements or to cover loan-clos-ing costs. The FLHBI dedicates 10 percent of its annual net income to fund the AHP. The Indianapolisbased bank is privately funded and receives no taxpayer assistance. Through 2001, the FHLBI has awarded more than $81 million through the AHP to help more than 17,000 households obtain safe, decent housing.

Reasons not to privatize Social Security

By MARTHA A. McSTEEN (NAPSA) — You may be hearing arguments that our nation needs to privatize Social Security to save the program. As you hear about radical proposals to change an otherwise extremely successful program, consider: Truth 1: Privatization will hasten the insolvency of Social Security. Shifting two percentage points of the payroll into individual accounts will accelerate the date when the trust fund obligations exceed income from 2016 to 2007. Truth 2: Privatization would deprive Americans of part of Social Security’s insurance protections. The program helps alleviate economic disaster for families when a wage earner becomes disabled or dies. One-third of Social Security benefits go to children, disabled workers and widows and other non-retired workers. Truth 3: Privatization would put retirement security at risk. Social Security provides a guaranteed income for life, with increases for inflation. Stock market returns can fluctuate dramatically. The stock market fell 45 percent between 1968 and 1978.

Truth 4: Noted economists found that even with very optimistic assumptions for market performance, total retirement benefits from Social Security and individual accounts could fall 20 percent for an average single wage earner and 38 percent for married couples under a reform plan suggested by President Bush during the campaign. Truth 5: Privatization would be hugely expensive. Today’s benefits are paid with today’s payroll taxes. If payroll taxes are diverted into private accounts, the government must make up that money, through reduced benefits, a tax increase, increased borrowing or some combination. Actuaries estimate partial privatization would cost more—at least $1 trillion over 10 years — money the federal government does not have after the tax cut. Truth 6: Administrative fees and other charges will reduce the return of individual accounts. In other countries, the administrative costs for individual private accounts average between 13 and 20 percent of workers annual contributions, substantially eroding any gains in the stock market. The fees financial advisors charge average between 3 and 5 percent of an individual’s accumulated assets. One study of Great Britain’s partially privatized system showed

that lifetime administration fees lowered the account’s value by 45 percent. Current U.S. Social Security administrative costs amount to less than 1 percent of incoming revenues. A brokerage house or investment bank is going to charge much more than the present system and those high administrative fees will eat into the individual’s actual rate of return, particularly for low-income workers. Truth 7: Social Security can pay full benefits until 2038. Solvency can be extended further by expanding the number of workers participating in Social Security, raising the cap on taxable income or allowing the government to invest the funds in the equity markets. For more information on Social Security privatization, including a brochure on how to win the privatization debate, call the National Committee at (800) 966-1935 or visit www.ncpssm.org. Martha A. McSteen is president of the National Committee to Preserve Social Security and Medicare, the nation’s second largest senior advocacy group.

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Cashing out your 401 (k) can be costly

By CRAIG BRIMHALL (NAPSA) — Americans have become increasingly concerned about job security, and with just cause. Unemployment has been on the rise, and that means many people will search for additional funds to help them get through a financially uncertain period of time. Some may choose to cash out their retirement accounts early. However, this seemingly easy choice carries a steep price. For example, if you have $15,000 in your 401(k) and decide to take a lump-sum distribution after you leave your job, you’ll lose the benefits of tax deferral and the potential opportunity for investment gains worth tens of thousands of dollars. Assuming an 8 percent annual return, that same $15,000 could reach nearly $70,000 in just 20 years. Additionally, taking a distribution can mean you’ll get socked with a 10 percent early-withdrawal penalty as well as federal and state income taxes. If you’re in the 27.5 percent tax bracket, federal taxes and penalties will add up to a large bite—$5,400 before state taxes— of your $15,000 distribution.

To avoid such losses, consider rolling your 401 (k) to an Individual Retirement Account (IRA). Doing so will likely give you increased investment options and more control over your money. With an IRA, you can invest your money a number of different ways, including in stocks, bonds, mutual funds and certificates of deposit. As with a 401 (k), your assets will still grow tax-deferred and, as your investments grow, you’ll still enjoy the benefits of compounding growth. IRAs provide more flexibility for distributions than a traditional employer plan. Another benefit is that you can convert to a Roth IRA. You’ll pay taxes on the conversion amount, but you’ll be able to enjoy the benefits a Roth IRA provides, including the potential for tax-free growth, no taxes on withdrawals after five years and age 59 VI, and no minimum distribution requirements. When you leave your employer, you potentially have several options for the money in your 401 (k), including: take it and spend it; keep it in your former employer’s plan (if you have at least $5,000 in the plan); transfer it to your new employer’s plan; or roll it over into

an IRA. Before choosing, consider the impact of your decision. According to a recent report by Cerulli Associates, of Americans who took a lump-sum distribution from a former employer’s retirement plan, more than half chose not to roll the funds into an IRA. Considering the recent rise in corporate layoffs, literally millions of Americans may be squandering their future retirement assets when they get “pink slipped.” If you’d like to learn more about IRAs and how to handle your retirement fund dollars, consider consulting a professional financial advisor. Starting in 2002, the new tax law may provide even more options for rolling your money out of one retirement plan into another. A qualified financial advisor can answer your questions about a rollover IRA and help you make the most of your retirement funds, putting together a plan that's in step with your current and future needs. Craig Brimhall is vice president, wealth strategies, of American Express.

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Firms of color should share in pension, 401 (k) funds, says Jackson

(NNPA) — Firms of color should ask for 10 percent of the fees for managing 401(k) and corporate pension money, says the Rev. Jesse Jackson. “Those who are locked out can ’ t get opportunities,” the civil rights leader said at the recent opening of the Rainbow/PUSH Coalition's fifth annual Wall Street Project Conference in New York City, a four-day event. “We have qualified money managers,” asserted Jackson. But the “incestuous” way American com-

panies are chosen leaves out nonwhite firms. “We should go back to these companies and ask them to set a 10 percent goal for money-manage-ment fees,” he said. “We deserve it and we have qualified people to do it.” A company that gathered statistics for the conference found that only 0.2 percent of all fees paid for asset management by the top 200 firms in the Fortune 500 were collected by firms of color.