Administration June 10, 2004

UAL Employees Selling Airline Stock

October 30, 2002 (PLANSPONSOR.com) - Amid the threat of potential bankruptcy filing that would make their shares of United Airlines parent UAL virtually worthless, many United employees are selling some of their company stock holdings before it's too late.
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By unloading part of their stake, UAL employee-shareholders who together own 55% of UAL, hope to diversify their holdings and help protect their nest egg, according to a Dow Jones news report.

Facing $945 million in debt repayment and other obligations before year-end, UAL, parent of the world’s second-largest carrier, has warned it may be forced to file for Chapter 11 later this year if it can’t reduce costs, win $1.8 billion in federal loan guarantees and raise $2 billion in fresh capital, Dow Jones said.

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State Street Corp.’s State Street Bank and Trust, hired in August by a committee representing the UAL employee-owners to manage their investments, registered to sell 11 million of the 59 million UAL shares held for the workers, according to Dow Jones. UAL said in a regulatory filing Friday that State Street has begun selling the shares on the open market. (See  State Street Selling UAL Stock ).

State Street determined that being solely invested in UAL stock was ” inconsistent” with federal pension laws governing employee stock ownership plans, the International Association of Machinists union said in a note to members, Dow Jones said.

However, State Street is constantly reviewing the decision and can decide to halt the sales or buy back the stock, said the union representing about 35,000 United workers.

The UAL stock sold on behalf of the employees is sold on a proportionate basis from all participants’ accounts, and proceeds and any earnings related to the sales are also credited to their accounts proportionately, the machinists union said. State Street, the union said, is investing the proceeds in a short- term investment fund, according to the report.

Investing June 9, 2004

Study: Individual K Plans Booming

June 9, 2004 (PLANSPONSOR.com) - Individual 401(k) plans were hot during 2003 - red hot, according to a new research report.
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FRC estimates that the product sales – aimed at owner-only businesses – have generated $1.5 billion in assets as of year-end 2003 and will have an asset pool twice that size at the end of 2004.

Following the entrance of dozens of providers into the individual K arena in 2003, FRC predicts 40,000 to 50,000 new plans will be adopted in 2004, as financial advisors and small-business owners become more aware of the benefits of the plans, which also include the ability to consolidate multiple retirement accounts and to take loans.

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The success of the individual K plan stems from the ability for small business owners to make larger contributions to them ($41,000 in 2004, excluding an additional $3,000 catch-up contribution available to those age 50 or older) at lower income levels than they could in any other defined contribution or IRA-based retirement plan, FRC said in its  research report .

Chris Brown, vice president and Director of Retirement Market Research at FRC, said that the plans are designed for a “vast and growing” niche, including millions of highly compensated self-employed professionals, such as doctors, lawyers, and real estate agents.

“With just 50,000 Indy-k plans adopted to date, investment manufacturers and distributors still have an opportunity to get in during the early stages of what will be a rapidly accelerating and increasingly lucrative market,” Brown said in an FRC news release.

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