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There’s big news in IndividualRetirement Accounts in 2002—reflecting a renewed focus onencouraging Americans to save forretirement. For the first time in 20years, the maximum contributions toIRA accounts have increased. Thatmeans more tax savings today andmore money to support your lifestylewhen you’re ready to retire.

Contribution limits to traditional andRoth IRA accounts increase by 50percent and more than that for peopleage 50 and over.

Here’s how your potentialcontributions stack up:

2002-2004Contribute up to $3,000 per eligibleindividual. If you’re 50 or over, you cancontribute up to $500 more than that.

2005Contribute up to $4,000 per eligibleindividual. If you’re 50 or over, you cancontribute up to $500 more than that.

2006-2007Contribute up to $4,000 per eligibleindividual. If you’re 50 or over, you cancontribute up to $1,000 more than that.

2008Contribute up to $5,000 per eligibleindividual. If you’re 50 or over, you cancontribute up to $1,000 more than that.

The rules on whether a contribution toa traditional IRA is tax deductible donot change. Your modified adjustedgross income also continues to affecteligibility to contribute to a Roth IRA.

continued on page 2

A Publication for members of Northrop Grumman Federal Credit Union

February/March 2002

IRAs Save on Taxes Today –Add to Comforts Later

Win, Win, WinWith A

Manufacturer’sRebate!

In place of the zero percent financingoffered by many dealers to a very selectgroup of auto buyers,General Motors isnow offering rebates on the purchaseof a new car or truck. This is a favorabletrend for Northrop Grumman FederalCredit Union members. You can takeadvantage of the manufacturer’s rebateand get generously discounted CreditUnion auto loan rates, too.

Starting with the manufacturer’s rebateand an NGFCU loan, you can save evenmore with a 1% discount on our alreadylow rates by signing up for 5 otherselected Credit Union products and services.

Arming yourself with an NGFCU autoloan pre-approval will give you addedpower to negotiate the best deal onyour new or used car. It’s simple.Call aloan representative at 800-633-2848anytime to start your application. Noneed to come to a Credit Union branchfor an auto loan; the entire process canbe handled by phone and fax. See page7 for rates as of the publication date ofthis Contact newsletter.

Compounding the benefits of amanufacturer’s rebate with low CreditUnion auto loan rates, a generous ratediscount and a pre-approved auto loan,you stand to win, win, win!★

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New Tax CreditNew this year is a tax credit for low andmiddle-income people who save in anIRA or other eligible retirement savingsplan. A non-refundable tax credit onthe first $2,000 saved will be availableto some taxpayers, with the amountbased on modified adjusted grossincome (MAGI). Please see the charton this page for information oneligibility for a tax credit on 2002 IRAcontributions.

IRAs at Your Credit Union Remember that you pay no trustee feeat the Credit Union,so all the dividendsstay working for you.

January 2002 is the right time toincrease or begin a regularcontribution to an IRA accumulationaccount at Northrop Grumman FCU.You begin earning dividends as soon asyour account reaches $100.When youhave at least $2,000 in the account,youcan increase your earnings by openinga term account for a higher guaranteeddividend. But keep on saving for taxyear 2002 because your contributionlimit is $3,000 per individual,or $6,000for a married couple filing jointly.

If you want to make an IRAcontribution for tax year 2001,remember that you have until April 15to do it. Generally, the maximumcontribution is $2,000 per individual,$4,000 for a married couple filingjointly.

Primer on IRA SavingFollowing is a brief summary aboutsaving in IRAs. References to taxdeductibility or tax-free are forinformation only; please ask your taxadvisor for guidance.

Traditional IRA – Your contribution isdeductible, partially deductible or notdeductible on your federal tax return inthe year it is made, depending on yourmodified adjusted gross income andwhether you participate in anemployer-sponsored retirement plan.However, in all cases, taxes on thedividends deposits earn are deferreduntil distributions are made, usuallyafter the contributor reaches age 592.Distributions before age 592 may besubject to a 10% tax penalty, but thepenalty is waived in certain cases evenon these early distributions.

Roth IRA – Eligibility to makecontributions to a Roth IRA dependson your modified adjusted grossincome.The contribution to a Roth IRAis never tax deductible. You save ontaxes when you begin to use themoney because you pay no federal taxon any of the distributions from thisaccount (contributions plusdividends), generally after the age of592. There are also specialcircumstances in which you are eligibleto take penalty-free or tax-freedistributions at an earlier age, such aswhen you buy a first home or if youbecome disabled. Please consult a taxadvisor for more information.★

Your Credit Union’s MoneyMaster Lineof Credit is a convenient andeconomical way to peace of mind thatyou’ll have quick access to moneywhen you need it.

It’s free to apply for this line and you’llpay nothing until you take money out.With no fee when you take an advance,the MoneyMaster is a quick and easysource of extra funds. The maximumline of credit is $25,000.

Monthly payments can be madeconveniently by automatic transferfrom one of your other Credit Unionaccounts. And there is no pre-paymentpenalty if you pay off your advanceearly.

Accessing your MoneyMaster Line ofCredit couldn’t be easier. Request anadvance at a Credit Union branch orover the phone, use Call 24, or use aconvenience check. When youdesignate MoneyMaster as overdraftprotection on your Credit Union ShareDraft account, you gain even moreconvenience. If you write a check formore than you have in your account,funds will automatically transfer so thecheck will be covered, alleviating theexpense and embarrassment of anoverdraft.

Making this financial tool yours issimple. Call 800-633-2848 at any timeto start the ball rolling. You will answersome questions and can finish up theapplication by mail or fax. Very soonafter that, you’ll know there’s moneywaiting for you—anytime.★

MoneyMaster

Ready When YouNeed It

up to $30,000

Credit on Your Federal Taxes for IRA Saving

up to $22,500 up to $15,000 50%

Married, FilingJointly

Head ofHousehold

Others Federal Tax Crediton Up To $2,000Saved

$30,001 - $32,500 $22,501 - $24,375 $15,001 - $16,250 20%

$32,501 - $50,000 $24,376 - $37, 500 $16,251 - $25,000 10%

$50,001+ $37,501+ $25,001+No credit but taxdeduction may beavailable

Mod

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djus

ted

Gro

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nco

me

IRA continued

Money WaitingFor You-Anytime

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Would-be first-time buyers have beenwatching home prices shoot up foryears in many parts of the U.S.but nowthis pricing spike seems to beflattening out and investing in a newhome will be affordable to morepeople. To help first-time home buyersespecially, Northrop Grumman FCUhas begun offering 80-10-10mortgage/first trust deed loans.

The 80-10-10 real estate loan is for abuyer who has between 10 and 19percent of the home’s price to use as adown payment. Normally, whenlending more than 80% of a home’svalue, the lender requires that aborrower purchase private mortgageinsurance (PMI) and maintain thatinsurance until the borrower has atleast 20% equity in the home.

With the 80-10-10 plan, a Credit Unionmember can borrow up to 10% of thehome’s value on a Home Equity Line ofCredit (HELOC). The member adds theHELOC funds to the down paymentmoney they already have, puts 20%down and takes a conventionalmortgage/first trust deed loan to cover80% of the home’s cost.

One major advantage to this type ofprogram is that the interest on aHELOC is usually tax-deductible (askyour tax advisor) while the premiumson PMI are not. And to make this evenmore attractive, the variable rate on aHELOC from Northrop Grumman FCUhit 5.5% in January. Even without thetax advantage, this new choice may bevery cost effective for you.

While this type of loan program is oftena major advantage to first-time buyers,afamily moving up into a new and betterhome might also benefit from the 80-10-10 plan.

And remember that even if you’re crazyabout where you live and don’t plan tomove for decades, this plan might bejust right for a member of your family.Your immediate family members,including your children, parents,brothers, sisters, grandparents,grandchildren, stepchildren,step-brothers and stepsisters, and yourparents-in-law, are eligible to join yourCredit Union and take advantage of allthe benefits of membership.

For more information please visit us onthe web at www.norgrumfcu.org orcall 800-633-2848 (Monday – Friday,7 a.m.–6 p.m. Pacific).★

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Think 80-10-10 For Your First Home

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The Federal Trade Commission and theRoyal Canadian Mounted Police recent-ly uncovered a scam involving morethan a dozen companies accused ofunlawfully coercing credit andATM/check card holders into paying$199 for each of their cards for unnec-essary fraud protection.

According to Card Alert Services (CAS),alleged security providers call card-holders and claim or imply that they areconnected with card issuers. They thenpressure cardholders to purchase addi-tional card security or fraud insurance.In many instances, the telemarketerswarned consumers they would beliable for future fraudulent charges orimplied they owed money for securityservices already in place.

Elderly cardholders appear to be mostvulnerable to this scam as telemar-keters apparently believe them to beeasily coerced and intimidated intoagreeing to pay for fraud protection.According to CAS, when a card issuercalled an alleged fraud protection com-pany representative to inquire about itsservices on behalf of a cardholder, therepresentative immediately asked if thecardholder was elderly, saying she was"probably just confused."

As with most of these types of inci-dents, educating consumers about pos-sible scams is an effective weapon tocombat them. Holders of the NorthropGrumman FCU MasterCard or VisaATM/Check Card need to know theyshould be wary of card serviceenhancements offered by any compa-ny. You already have zero liability forfraudulent charges or debits on yourNorthrop Grumman FCU cards at nocost to you.

We are not aware of any phony protec-tion service targeting NorthropGrumman FCU members but if a tele-marketer should call you, ask for theirname, company name and location,return phone number and supervisorname. If a telemarketer is reluctant togive this information, the call could befraudulent.

Potential scams should be reported tothe FTC toll-free help line at 877-FTC-HELP (382-4357).★

Thank you to Star Systems for permissionto reprint large portions of this articlefrom their "Transaction Times" newsletter.

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Telemarketers Use Security Concernsto Allegedly Dupe Cardholders

You Have ZeroLiability

Kash Chandani & Co., CPAs, providesdiscounted rates to Northrop GrummanFederal Credit Union members on preparationof tax returns. The preparation of a federalincome tax return begins at $79, with freeelectronic filing. The company also preparesstate tax returns, where applicable. To learnmore, call 800-537-7447 (800-LESS-4-IRS),email kashchandani@msn.com, or visit theirweb site at www.less4irs.net/services.html

Tax Time Again

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Flight Plan, a wholly owned subsidiaryof Northrop Grumman Federal CreditUnion, offers a variety of products andservices to Credit Union members,Northrop Grumman employees,retirees, and their families throughseveral outside providers.

Brokerage & InvestmentBrokerage and investment services andlife insurance are offered throughprofessional investment advisors ofLinsco/Private Ledger (LPL)*, aregistered broker/dealer and memberof the National Association of SecuritiesDealers (NASD) and Security InvestorProtection Corporation (SIPC). Mutualfunds, annuities and other investmentsare available through LPL’s registeredinvestment advisors: The GenslerGroup in California and the westernUnited States and the offices of MargieKosmerl and Karen Porter in theMaryland/Virginia area and the easternUnited States. For more informationor a no-cost, no-obligation consultation,call the LPL offices of The Gensler Groupat 800-200-1121 or the offices ofMargie Kosmerl and Karen Porter at800-552-2361.

Auto/Home InsuranceMembers in California,Arizona,Nevada,and Utah are invited to ask for a quotefrom Civil Service Employees Insurance(CSE Insurance) home and auto insurance.Besides being eligible for group ratesthrough Flight Plan, members mayqualify for discounts for multiplepolicies, good driver, good student, andsenior driver, as well as otherspecialized discounts. For a no-obligation quote, simply call888-CSE-1220.

Dental CoverageFlight Plan, through its subsidiary, TheDental Service Center,offers two dentalplan options that reduce annual out-of-pocket expenses for routine andemergency dental services. For moreinformation call 888-293-4903.

Long-Term Care InsuranceAlthough the umbrella of an employer’sgroup insurance is normally sufficientto cover current medical needs,they donot cover every need or situation. Anindividual Long Term Care policy withCAN Insurance can help fill the gaps. Ifyou are an active Northrop Grummanemployee, this coverage is offered on a"guarantee-issue" basis. Long-Term CareInsurance coverage is an importantelement to consider as you plan foryour future. For more information callour plan administrator at 888-287-8810.

Medicare Supplement InsuranceMedicare was never designed to payall health care costs and many retireesfind themselves paying a goodportion of those costs. Withdeductibles, co-payments and otherout-of-pocket costs always increasing, aMedicare Supplement is moreimportant today that ever. Flight Planhas leveraged the buying power of30,000+ Northrop Grumman retireesto provide a special MedicareSupplement Insurance Plan. For moreinformation call 800-749-6983.★

*Mutual funds, annuities and otherinvestments available throughLinsco/Private Ledger are not deposits inNorthrop Grumman FCU, are notinsured by the NCUSIF, nor are they oblig-ations of, or guaranteed by NorthropGrumman FCU. Such investments mayfluctuate in value and are subject toinvestment risks, including loss of some orall of the principal.

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Flight Plan Financial Services, Inc.

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Northrop Grumman Corporation andNorthrop Grumman Federal CreditUnion have benefited together fromthe investment of time, work andmoney from more than 30,000Northrop Grumman retirees nation-wide. In fact, most retirees continuetheir membership at the Credit Unionlong after they’ve stopped reporting forwork every day. Northrop GrummanRetirement Club president GerryMathiason recently asked the CreditUnion to pass along information aboutthe Club so people who want to stayconnected with others who share theirNorthrop Grumman background canfind their closest chapter.

If you have an active NorthropGrumman retiree meeting at a locationnot listed, please contact JimBarnfather, vice president, NorthropGrumman Federal Credit UnionCorporate Business Development, at800-633-2848 x4897 so we can includeyour location in future listings.★

Location

Hawthorne

Anaheim

Antelope Valley

Calif. Central Coast

Conejo Valley

Hemet

Illinois

New England

No. San Diego

So. Orange County

Temecula Valley

President

Gerry Mathiason

Maury Thews

Chet Piolatto

Ed Bonge

Mike Novak

Rosalie Moyer

Barbara Bennett

Jim Hindman

Jean Brauns

Betty Langford

Neal McKenzie

Phone

310-542-8153

714-828-0258

661-285-8235

805-937-4843

805-484-3442

909-925-1214

847-259-9064

508-339-4214

760-727-6885

949-498-3317

909-676-7520

Northrop Grumman people helped build a company;continue to provide their strength to the Credit Union

Northrop Grumman Retirement Club Chapters

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YES, I am interested in learning more about securing my own financial future.Please send me information on the following:❏ Retirement Planning ❏ Reducing Taxes ❏ Life Insurance❏ IRA Rollovers ❏ Mutual Funds ❏ Auto/Property Insurance❏ Long-Term Care ❏ College Funding ❏ Savings and Investment Plan 401(k)❏ Medicare Supplement ❏ Dental Plans * Securities are offered through LINSCO/PRIVATE LEDGER,

Member NASD/SIPC

Send your request to FPFS, Box 866, Hawthorne, CA 90251

Name__________________________________________________Phone Number______________________________

Address___________________________________________________________________________________________

City___________________________________________________State___________ZIP_________________________

I would like to discuss my choices with FPFS.Please call me at:________________________________________________

Flight Plan Financial Services, Inc.A wholly-owned subsidiary of Northrop Grumman Federal Credit Union

Retirement ClubsAre Your Link ToThe Credit Union

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Problems? Inquiries?The Supervisory Committee is charged with theresponsibility of continually reviewing the operation ofthe Credit Union to ensure that it is operating in the bestinterest of its members. Any questions, suggestions orinquiries should be directed to:

Chairman, Supervisory CommitteeNorthrop GrummanFederal Credit UnionP.O. Box 3382Gardena, CA 90247-7082

Important TelephoneNumbers

Credit Union . . . . . . . . . . . . . . . . . . . . . . . (310) 808-4000Outside 213 or 310 . . . . . . . . . . . . . . . . . (800) 633-2848Eastern Region . . . . . . . . . . . . . . . . . . . . (800) 634-7075

CALL 24, 24-HourTouch-Tone Transactions . . . . . . . . . . . . . (310) 327-0682Outside 213 or 310 . . . . . . . . . . . . . . . . . (800) 676-3328

To report a lost or stolencredit union MasterCard . . . . . . . . . . . . . (800) 453-4270

CO-OP Network ATM Locations . . . . . . (888) SITECOOPCU Service Center Locations . . . . . . . . . . (888) 287-9475

Auto Loan Rates may be discounted up to 1%. Call for details.

Account Min. Bal. APY*Money Market $2,500 2.12% Lower rates apply if balance falls

below the minimum shown6-Month Term $5,000 2.14% A penalty may be imposed for1-Year Term $5,000 2.20% early withdrawal2-Year Term $5,000 2.90% 30-Month Term$5,000 3.17% Rates change weekly3-Year Term $5,000 3.43% 4-Year Term $5,000 3.85% Call for current rates5-Year Term $5,000 4.27% A .25% bonus dividend will be applied to all term accounts $40,000 & over

MasterCard MoneyMaster

Real Estate Loans

www.norgrumfcu.org

Variable 11.50% APR 11.00% APRFixed 15.75% APR 16.00% APRLoan limits of $500 to $25,000, no annual fee.Total of MasterCard and MoneyMaster Line of Credit may not exceed $25,000.

SAVINGS RATES

Credit Union Rates The following is a sampling of most recent rates at time of publication. Pleasecall for other rates and terms. Rates subject to change.

LOAN RATESNew& Used

VehiclesLoan Value

80%

90%

100%

VariableRate

Up to 6 yr.

5.75%

6.25%

6.75%

FixedRate4yr.

6.25%

6.75%

7.25%

Fixed Rate5yr.

6.50%

7.00%

7.50%

Fixed Rate6 yr.

6.75%

7.25%

7.75%

To: Northrop Grumman Federal Credit UnionAttn: Service Group

YES, I WANT TO KNOW MORE. PLEASE SEND ME:❏ B-2 Image/Gold MasterCard application ❏ CALL 24 application❏ Mortgage/First Trust Deed Loan application ❏ Term Savings Account information❏ Home Equity Line of Credit application ❏ Auto Loan information❏ MoneyMaster Line of Credit application ❏ Net Paycheck sign-up form❏ Share Draft (checking) application ❏ Star System/Cirrus ATM locations❏ Visa ATM/Check Card Application ❏ PALSsm (Precision Auto Locator System)❏ Direct Deposit of Social Security application ❏ Family Membership Kit❏ Direct Deposit of Retirement application ❏ Holiday Account applicationNot necessary to complete if mailing address is on reverse side.

Name ______________________________Account Number __________________________________________Address__________________________________________________________________________________________________________________________________________________________________________________

Mortgage/First Trust Deed LoanThink about your Credit Union first when financing the purchase ofa home or refinancing. Conventional, jumbo,VA and FHA loans available.Call (800) 633-2848 (Monday-Friday, 7 a.m. – 6 p.m. Pacific) for informationand the latest rates.

Home Equity Line of Credit – 5.50% APR Variable RateThis credit line secured by the equity in your home provides fastaccess to funds for any purpose. The Credit Union pays a $650allowance toward origination fees. Borrow up to 90% of AppraisedValue of your primary residence minus balance on mortgage/firsttrust deed. $100,000 maximum credit line. Up to 15 years to repay.*APY – Annual Percentage Yield APR – Annual Percentage Rate

07_13348(13589)_Northrop_News_ 2/14/02 4:40 PM Page 7

PRSRTSTD U.S. POSTAGE

PAID SUN VALLEY, CA

PERMITNO. 8

Each member credit union federally insured to$100,000 by the National Credit Union Administration,a U.S. Government Agency

Box Number 5011Hawthorne, CA90251-5011

You may have heard about theEducation IRA and its limit of $500 peryear but in 2002, that account has anew name and new rules. Now, it’s aCoverdell Education Savings Accountand up to $2,000 can be saved per year,per student.

Start your Coverdell Education SavingsAccount as early as possible to helpensure the youngsters in your life canget the best education possible. Youcan start with as little as $5 in an

accumulation account and set upautomatic deductions from any of yourCredit Union accounts to make thesaving very easy.

If your income falls within theprogram’s guidelines, there is no limitto the number of Education SavingsAccounts you can contribute to forstudents under the age of 18; one foreach child or grandchild,or even niece,nephew or neighbor, if you choose.Though the contribution is not tax

deductible, withdrawals from theaccount, including contributions anddividends, are free from federal taxwhen distributed before thebeneficiary’s 30th birthday. However,distributions must go for educationexpenses related to primary school,secondary school, college, graduate orvocational schools. Eligible expensesinclude tuition, tutoring, books, roomand board, equipment and supplies.Please consult your tax advisor forcomplete information.

Call 800-633-2848 (Monday-Friday,7 a.m.–6 p.m. Pacific) to learn moreabout this investment in the future andto set up an account today.★

Generally, you are eligible to contribute toa Coverdell Education Savings Account ifyou are single with modified adjustedgross income (MAGI) of $110,000 or less;or married, filing jointly, with MAGI of$220,000 or less.

New Coverdell Education Savings Account

Bigger Name, Better Rules, Tax Saving Opportunities

Invest in Education

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