Impact of a GM Bankruptcy

1
Impact of a GM Bankruptcy

• GMSSPP or GMPSP 401(K)
• Promark Income Fund
• Pension Plan
• Pension Benefit Guarantee Corporation
• Can I rollover all or part of my pension plan and
  401(K) to an IRA?
• What can I do with after tax assets in my 401(K)
• How can I access assets from my 401(K) or IRA
  penalty free before age 59 ½
• Defensive actions to consider

2
GMSSPP or GMPSP 401(k)

• Amounts invested in a 401(k) plan by a
  participant constitute assets of the 401(k)
  retirement plan and are held in trust for the
  benefit of the participant.
• These investment assets do NOT belong to the plan
  sponsor and are segregated and separate from the
  plan sponsors assets.
• Under current law, participants assets are NOT
  at risk of being determined to be property of a
  General Motors bankruptcy estate.

3
Promark Income Fund

• What is Promark Income Fund?
• A bank maintained collective investment fund
  managed by General Motors Trust Bank with a
  stable value investment strategy.
• GMTB is an indirect wholly owned subsidiary of
  General Motors and a GM Bankruptcy should not
  affect GMTBs ability to serve as manager of the
  fund.
• The fund invests in investment grade and
  non-investment grade fixed income securities
  (9/08)
• 35.6 Corporate, 25.8 Mortgage Backed, 20.5
  Government, 11.5 High Yield, 5.7 Short term
• Insured by wrap contracts issued by several
  highly rated insurance companies. (AA by SP)
• Aegon, ING, Pacific Life
• For more information refer to GM PSP and GM SSPP
  Prospectus

4
Pension Plan

• Will bankruptcy affect my pension?
• Much more complex than 401(k) issue
• It is possible that GM Bankruptcy will have no
  current affect of on the pension plan.
• Pension plan could continue to operate through
  bankruptcy proceedings and could continue to be
  an obligation of a post-bankruptcy GM.
• In some cases, bankrupt companies do choose to
  terminate their pension plans as part of their
  reorganization.

5
Pension Plan Funding

• Funding of Pension Plan according to GM filing
  with the SEC on 2/18/09
• Combined U.S. pension assets dropped to 84.2
  billion on 12/31/08 compared to 104.1 billion at
  end of 2007. Funding levels dropped from 124 to
  87.
• Market correction (GM pension 26 equities)
• Early Retirement Buy outs
• Hourly pension now 55.5 billion and 83 funded
• Salaried pension now 28.7 billion and 95 funded
• May have to seek additional financial support in
  2013 and 2014 if funding conditions dont improve

6
Pension Plan

• Termination of Pension Plans
• Terminated plans dont necessarily mean
  terminated benefits for participants.
• Many current retirees and near retirees may see
  no changes in their benefits IF GM did terminate
  their pension plan.
• Termination of the plan means turning over its
  operation to the Pension Benefit Guaranty
  Corporation (PBGC)

7
Pension Benefit Guaranty Corp.

• Created by Employee Retirement Income Security
  Act (ERISA) of 1974.
• Protects the retirement income of 44.1 million
  American workers in 30,330 private sector defined
  benefit pension plans.
• PBGS is NOT funded by general tax revenues.
• PBGC collects insurance premiums from employers,
  earns money from investments, and receives funds
  from pension plans it takes over.

8
Pension Benefit Guaranty Corp.

• If your plan ends without sufficient money to pay
  all benefits, PBGC will pay you the benefit
  provided by your plan up to the limits provided
  by law.
• Now pays monthly retirement benefits to about
  683,000 retirees in 3,595 pension plans that
  ended.
• The maximum pension benefit guaranteed by PBGC is
  set by law and adjusted yearly.
• For plans ended in 2009, workers who retire at
  age 65 can receive up to 4,500 per month
  (54,000 yr.) Single life annuity or 4,050 per
  month (48,600 yr.) Joint and 50 Survivor
  Annuity. The guarantee is lower for those who
  retire early. The guarantee increase for those
  who retire after age 65.
• For additional information- www.pbgc.gov

9
Pension Benefit Guaranty Corp.

• Maximum Monthly Guarantees for 2009
• AGE Single Life Joint/50
  Survivor
• 65 4,500 4,050
• 64 4,185 3,767
• 63 3,870 3,483
• 62 3,555 3,200
• 61 3,240 2,916
• 60 2,925 2,633
• 59 2,745 2,471
• 58 2,565 2,309
• 57 2,385 2,147
• 56 2,205 1,985
• 55 2,025 1,823
• 54 1,935 1,741
• 53 1,845 1,661
• 52 1,755 1,580
• 51 1,665 1,499
• 50 1,575 1,418

10
Pension Benefit Guaranty Corp.

• In a recent interview, the acting director of the
  PBGC Vince Snowbarger noted that GM is not
  expected to terminate its pension plan in
  bankruptcy.
• Uncertainties of bankruptcy makes the issue of
  pension plan termination a very volatile and
  fluid situation.

11
Can I rollover all or part of my pension plan and
401(K) to an IRA?

• Pension Plan
• Active Salaried Employees
• Your Part B contributions only
• Will reduce monthly benefit
• Employees who have severed service
• Order pension projection for
• Single life annuity and 65 survivor benefit
• Lump sum option
• Pension Protection Act and IRS regulations impose
  restrictions on accelerated payments (Lump Sum
  Distributions) when funding levels fall below
  80.
• As of 12/31/08 GM Hourly pension funding level
  was 83 and Salaried pension plan was 95 funded.
• Delphi pension no longer allows lump sum
  distributions

12
What can I do with after tax assets in my 401(K)

• Available penalty and income tax free for
  emergency cash reserves.
• Rollover to tax free Roth IRA in 2010.

13
How can I access assets from my 401(K) or IRA
penalty free before age 59 1/2

• 401(k) Age 55 Rule
• IRA 72 (t) Rule

14
Defensive actions to consider

• Build up emergency cash reserves in FDIC insured
  money mkt, savings, or CDs.
• Pay down short term debt.
• Review your current mortgage rate and if
  appropriate, refinance to new lower rate 30 yr.
  fixed mortgage.
• Rebalance 401(K) and other investments to more
  moderate allocation.
• Update your retirement plan
• Review current holdings to assess age 55 rule,
  72(t), and after tax assets.
• Pension alternatives

15
Actions to Consider

• Update your financial plan to adjust for
• Lower pension benefits
• Higher health care cost
• Higher taxes
• Longer life expectancy
• Increase retirement savings
• 401(k) new Roth 401(k)
• IRAs and Roth IRAs
• Tax Deferred Variable Annuities with living and
  death benefits
• Separately Managed Accounts
• REITs
• Delay retirement or work part time for a few years