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THE BOEING VIP - AND WHAT YOU HAVEN'T BEEN TOLD - ***** From Donald Shuper Boeing Retiree (1995 ) *****
Rev D-2-20 2001 removed smart money link SO WHAT HAPPENED WHEN I WENT TO TRANSFER MY VIP FUNDS INTO AN IRA-ROTH IRA ?? KEEP READING
As of Friday the 13th (Feb) I have just completed a rollover of all of my VIP funds to an IRA prior to transferring into a ROTH IRA. It has been expensive. I have lost money - in the range of hundreds to thousands of dollars because of Boeing and State Street undisclosed agreements, and incredible screw-ups by both organizations.
The errors and bungling involved have yet to be untangled. I don't know all the answers. I intend to warn those who may be planning to retire within the next few years, or who hope to take advantage of the ROTH IRA this year.
I suggest you demand immediate correction and explanation of the so far undisclosed and unknown :
I am a Boeing Retiree and a participant in various Employee
benefit programs, PENSION, VIP, FSP.
This letter deals with information related to ERISA, and your
right to know
My Previous e-mails dealing with this subject have apparently had wide distribution. That was/is my intention.
Management has accused me of being " irresponsible " by sending "misinformation" about the VIP program to Boeing Employees.
After reading this, you may want to call 544-1143 and ask
where or when Boeing plans to disclose and fix the the
obvious problems. Boeing is still responsible for disclosure and
fiduciary responsibility.
**** With two minor corrections explained below, I stand by my previous comments and descriptions.****
What many do not realize is that the FSP and VIP Plans are covered by the same Federal regulations - ERISA
I call your attention to pages ages 4-22, 4-23, 5-22, 5-23, 6-13, 6-14, of the 1993 edition of " Your Personal Benefits booklet ". The 1996 edition should have similar statements. They give an overview of your rights under ERISA. Similar statements are required by Federal Law. However, some of the Boeing statements in sections 4,5, and 6 are misleading. For example 29 CFR 2520.102-3-states in part: .
"However, the style and format of the statement shall not have the effect of misleading, misinforming or failing to inform participants and beneficiaries of a plan. All such information shall be written in a manner calculated to be understood by the average plan participant, taking into account factors such as the level of comprehension and education of typical participants in the plan and the complexity of the items required under this subparagraph to be included in the statement. Inaccurate, incomprehensible or misleading explanatory material will fail to meet the requirements of this section."
- This is the first update --
---- The following is a variation of e-mail(s) recently sent to various Boeing Employees - minor updates and a different table arrangement have been made.
THE PROBLEM(S)
From e-mail of Feb 14.
"The following information is provided as a result of my first e-mail on the subject of VIP practices and certain comments. I am sending this update to all those I am aware of who have received /responded to my e-mails. E-mail replies I have received have been supportive. Some asked some appropriate questions which I have attempted to answer. I will eventually post on my web site considerably more supporting detail to my comments, observations, and actual experience with the Boeing VIP Plan."
-
I am awaiting transcripts of some conversations. Because the VIP PLAN is also covered by the same ERISA Federal Regulations, it is appropriate to discuss how to obtain factual information. I have the 1993 Summary Plan Document ( Your Benefits Booklet ). Pages 5-18 to 5-22 explain your rights under ERISA. The 1996 booklet you received in November 1997 should have similar if not identical wording.
*** JUNE 98- AFTER TWO MONTHS , SSg called in April- " re your questions, you will have to contact Boeing !! ***
I suggest you take the time to read them carefully. After all its YOUR money, and YOUR right to get certain information. But you must ask the right questions in writing by Certified Mail, return receipt requested.
Can you rely on phone answers? My experience indicates not if you want FACTS. Rely on phone answers at your own risk.
This explanation is somewhat detailed, because it is somewhat controversial. Other problems are stated without trying to explain the ridiculous conversations and BITE that caused the situations. But when I get transcripts ..
1) My initial e-mail referred to an apparent disparity on rates of the VIP Stable fund . I quoted an apparent rate from October 1997 to Jan 98 of 5.25 %. This was based on information supplied to me by State Street (SSG) for my fund balances. Using standard accepted formulas and using a standard 365 day year, the actual dates and annual percentages are shown below. Boeing maintains the rate for this year (1998) is 7.1%, SSG says 7.01 %. ( Of course it was SSG that also said " we only count business days " among other yet to be revealed classical misstatements. Transcripts have been requested. )
MY ERROR? AND CORRECTION - To the extent of the difference between 5.25 percent and the 5.4-5.7 percent rate shown between Jan 6 - and Feb 2 in the TABLE , I admit to a possible error.. Both the 5.4 percent and the 18 percent figures *could* be the result of an error in writing down the fund values given to me over the phone on Feb 2. But two fund value errors would have to be made. Back testing and error equalization still gives rates about .25 percent below the stated rates, even for previous years. The formula used for the data below is found in Excel as INTRATE = ( Redemption-Investment ) * ( 365 ) / ( Investment ) * ( days from settlement to maturity ). I have yet to find the answer, but the implications/questions are many.
ASK BOEING Call 544-1143
1) What values are/were used over the years when you re-allocate funds in mid year? BITE?
2) Was some form of equalization used to correct to guaranteed rates for fund payouts ? BITE?
There *may* be a rational explanation. My broker has queried a major insurance company to ascertain if most industry standard GIC [guaranteed investment contracts ] work as shown below. It will be awhile. Data has been normalized to $100,000 initial investment for privacy reasons -
The main point is that during the year, rates are NOT what are stated.
2) MY ERROR NUMBER TWO -- I was able to find out that in the case of retirees, we do not have to pay a $ 10 check fee. The information is on page 10 under " When you retire from Boeing."
3) Additional Note -- In mid Jan 98, I requested
a transfer from the Boeing Fund to the Index fund, with instructions
to leave $XXXX in the Boeing fund. This was not
done. What **seems ** to have happened is SSG left
the nearest " round lots" of 100 shares in my
Boeing fund. [ I was wrong, that was NOT
the problem ] The confirmation statement is useless
in this regard, as holdings are only reported in $$. There are
other problems with the statement as well, still to be untangled.
If there is a " round lot" trading requirement, where
is it disclosed. BITE?
NOTE UPDATE 20 FEB 98 - A new way of transferring funds- guess
who looses - Vipxfer
***** AND NOW ****
*** Yes, under the old system it took 25 plus days to get your check in the mail - but no such restrictions apparently applied to rollovers. But supposedly that changed with the NEW system. Think about the $$$.
A) Because this was a " direct rollover " into an IRA, there was/is NO other method of transferring funds. BITE.
"You cannot wire transfer." BITE
"Check can be mailed only to home address." BITE and " security"??
MARCH UPDATE : When SSG finally contacted me about a question I posed early in JAN - the basic answer was/is - " if you have a question /problem/ or complaint - WRITE TO BOEING --.
1) Request rollover on 3 FEB - 3PM - Market closed, transaction takes place on FEB 4th This is standard Industry practice.
2) Check dated 4 FEB
3) Check to be mailed from Boston on Friday 6th BITE?
4) Per phonecon with Boeing Administrator in Boston on WED 12th - because check had not arrived in my mail.
a) "Check mailed on Friday" NOPE- See # 6
b) Request trace - " No- BITE says only after 10 days "
c) If check lost "Issue another check (3 days), then remail. BITE
d) Who is responsible for interest/float/etc. "Post Office"????
e) Never disclosed -" Yes it was, when you made the transaction if you didn't want to do it that way, you could have canceled" "
5) Check arrives Thurs PM (FEB 12) first class, 25c postage.
6) Postage meter date - 9 FEB MONDAY -NORTH QUINCY MASS.
7) Hand deliver check to broker- Feb 13
a) Because I know broker,etc. can make investment(s) on same day Feb 13th.
b) But if I wanted portion in Cash - not available till 18th. (Monday is Holiday )
8) Check will not clear bank till 18th. 14 day float on MY money.
9) Cost of wire transaction $15 . Time is hours
to 1 day max., but this option NOT available. BITE.
Exercise - work out on 100K the following $$
a) 5% annual rate on bank fund transfers for 8 to 14 days.
b) 7% annual rate lost for 8 to 14 days ( Could have stayed in VIP Stable )
c) Delta in index fund over the same periods. Stock market hit new highs!!
Multiply sum of a) and b) by 1000 employees/year transferring funds out of VIP., pick an estimated factor for average fund- probably in excess of 100K.
Total is approx LOSS of YOUR $$ - or equivalent GAIN to SSG. That is known as " float " or in Boeing terms " best and standard practice "
Why do multimillion dollar deals (Airplanes ) work down to the nearest minute and use wire transfers? - Because it is the " stockholders money "
Of course for YOUR money . . . .
Quiz -- Where do you think your money goes ?
NOW YOU KNOW ABOUT " GOING PLACES " IT WASN'T YOU - IT WAS YOUR MONEY !!!
Try to find where the above practices are disclosed in your plan booklet or any other place. You know - those documents you have that meet the following ERISA requirements..
"The ERISA Notice may contain explanatory and descriptive provisions in addition to those prescribed herein. However, the style and format of the ERISA notice shall not have the effect of misleading, misinforming or failing to inform participants and beneficiaries of a plan. Any additional explanatory information shall be written in a manner calculated to be understood by the average plan participant, taking into account factors such as the level of comprehension and education of typical participants in the plan and the complexity of the items required under this section to be included in the ERISA Notice. Inaccurate or misleading explanatory material will fail to meet the requirements of this section."
Oh- The Going Places Booklet was not meant to be a complete description of the new arrangements ?
You might want to call 544-1143 and ask for the "Official Boeing position " and explanation as to if or/when a booklet that might someday meet the above requirements will be made available.
Technically, they *MAY* have up to 210 days--but what about those who decide to close out or transfer into an IRA or ROTH IRA ??
Meanwhile, figure out if you can or should put a lot of your VIP into a ROTH IRA Plan ahead if that is what you decide to do.
And keep an eye on my website - this is just the overview --
Don Shuper 15 FEB 98 - Update 11 June 98
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