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ALOHA AIRLINES FLIGHT ATTENDANTS PENSION UPDATE #2
On Monday, April 14, a meeting was held at which representatives of Bank of Hawaii, Aloha Airlines Human Resources, Choy & Co (plan actuaries), Smith Barney (investment consultants), attorneys and negotiators for Aloha Airlines and Association of Flight Attendants (AFA), and AFA MEC president Gail Kim-Moe and Benefits Board representatives Robyn Lee and George Yonamine met to discuss the current status of the Retirement Plan.
The shutdown of Aloha’s passenger operations triggered termination provisions set out in the Retirement Plan. The Retirement Plan is a “pension plan” under federal law. The termination of a pension plan and the ultimate distribution of its funds to plan participants must be carried out under the terms of the plan itself as well as provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (IRC).
Terminating a pension plan like the Retirement Plan is a time consuming process and usually involves applying to the Internal Revenue Service and securing a Determination Letter from the Service attesting to the plan’s compliance with all IRC requirements, thereby assuring the tax benefits of a “qualified plan” for plan participants.
This process, unfortunately, can take months to complete. The meeting described above was convened for the purpose of reviewing and discussing plan termination requirements. The AFA and MEC representatives stressed repeatedly the need to initiate and complete the Retirement Plan termination process as expeditiously as possible while satisfying the Retirement Plan provisions and ERISA and IRC requirements.
The Company and all its advisors understand the urgent need of flight attendants to have access to Retirement Plan funds.
All agreed that research would begin immediately to determine what the most expeditious process could be and to see if there was any possibility that Retirement Plan fiduciaries might be allowed to make a partial distribution of some part of Retirement Plan funds to participants before completion of the termination process, which could well take months to accomplish.
Further information on the timing and whether any part of plan participants’ funds might be available for distribution will be conveyed to you as soon as possible. In the meantime, for those of you with 401(k) account balances, a 401(k) to IRA rollover will be the fastest way to draw from retirement funds if you have immediate cash needs.
NOTICE: THE FOLLOWING INFORMATION WAS PREPARED BY REPRESENTATIVES OF SMITH BARNEY AND IS BEING PROVIDED SOLELY AS INFORMATION AND SHOULD NOT BE CONSTRUED AS A RECOMMENDED COURSE OF ACTION. YOU SHOULD ALWAYS SEEK THE ADVICE OF YOUR FINANCIAL ADVISOR BEFORE MAKING ANY DECISIONS REGARDING YOUR RETIREMENT FUNDS.
Aloha Airlines Flight Attendants have two sources of retirement income: their Fidelity 401(k) account and the Aloha Airlines Flight Attendant Retirement Plan (the “Retirement Plan”). Currently Aloha Airlines Flight Attendants have the option of rolling over their balances in their Fidelity 401(k) program to an IRA rollover with the IRA custodian of their own choosing. Once plan participants rollover their accounts, they are free to take distributions from their IRA subject to ordinary income taxes and any additional penalties that may apply.
Plan participants may contact Fidelity to request that IRA rollover application be sent to them. Although participants have the option of rolling over their account balance to any custodian there are some advantages to rolling your account balance over to a Fidelity IRA:
1) It’s the easiest & fastest way to get access to funds to make a withdrawal. Because Fidelity is the current 401(k) provider it can make a rollover as seamless as possible.
Peter Backus & Dave Kubo of Smith Barney are the current investment consultants for the 401k. Flight attendants may also choose to have their own financial adviser handle their IRA rollover at Fidelity. Most major brokerage firms have broker dealer agreements in place with Fidelity.
The second source of retirement funds for flight attendants is the Retirement Plan. The Bank of Hawaii is the trustee of the funds in the Retirement Plan. The funds are invested with a number of investment managers and have an equity allocation typically in a range of 60% - 75%. Accessing these funds will take some time as described above.
Peter Backus & Dave Kubo of Smith Barney are available to answer questions about your retirement accounts and can be reached via phone at 808-543-0343.
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