How safe are the assets in the Retirement and 401(k) plans?
401(k) Plan
Government regulations require that 401(k) monies be held in a trust for employees and maintained for the exclusive benefit of employees. The trustee is a legally established financial institution who oversees and protects 401(k) accounts on behalf of employees. Employee contributions and ABX Air matching contributions are wired to the trust after each pay period. The trustee ensures the money is received and invested as per employee elections. Once the 401(k) contributions are deposited to the trust, the money belongs to the employees. This means that ABX Air cannot access those assets and that if the company were to declare bankruptcy, the 401(k) funds would be secure from creditors. Fidelity is the trustee of the 401(k) plan.
Profit Sharing Plan
Similar to the 401(k) plan, the profit-sharing assets are held in a trust and maintained for the exclusive benefit of employees. The Company can direct investment of these funds but ABX Air cannot access those assets. If the company were to declare bankruptcy, the funds would be secure from creditors. The risk is that profit sharing monies, like all other investments, is subject to normal market gains and losses. Bank of New York is the trustee for ABX Air's profit-sharing plan.
Retirement Income Plan
Government regulations require that pension benefits be adequately funded and that pension money be kept separate from the employer's business assets and held in a trust. Thus, if an employer declares bankruptcy, the retirement funds would be secure from creditors. ABX Air complies with government funding regulations and the plan is audited annually to ensure compliance with the law. But as added protection, ABX Air pays annual fees to the Pension Benefit Guaranty Corporation, a Federal Government corporation that insures pension benefits. If a plan is terminated because the employer has financial difficulty and falls short of paying the promised benefits, the PBGC would assume responsibility for the plan. In 2008, the maximum benefit insured by the PBGC is $4,312.50 per month for a participant that retires at age 65. Bank of New York is the trustee for ABX Air's Retirement Income Plan.
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