GM Plan Review as of September 1, 2008

Introduction
With over three dozen investment options available, the General Motors Savings Stock Purchase Program for salaried employees and Personal Savings Plan for hourly employees are among the best 401(k) plans in the country. There are certainly enough funds in these plans to build a well-diversified portfolio for your 401(k) savings.

In this page of the website we include some general commentary about the GM plans and "Featured Funds" within the plan. We provide a table containing many of the funds available within the GM plans with critical data on each fund including style, risk, and past performance. Throughout the page we provide other information concerning the plan and links to other areas of our website that may be of interest.

Check this page for future updates to the SSPP & PSP plans as well as news that affects your company and your 401(k) investments.

The New SSPP and PSP - Effective June 29, 2007
In a sweeping overhaul of the Savings-Stock Purchase Program (SSPP) and the Personal Savings Plan (PSP) effective June 29, 2007, General Motors made the most significant changes to these 401(k) plans since 1995. Prior to 1995, the SSPP and PSP consisted of less than 10 investment options. The plans were expanded in 1995 to include 38 Fidelity Funds, and Fidelity Investments was made the record keeper for the plans. By 1999, the total number of investment options in the SSPP and PSP had grown to more than 70 through the addition of several more Fidelity funds and 17 Promark funds.

With the changes to the SSPP effective June 29, 2007, 53 investment options were removed from the plan and 23 were added taking that plan from 73 investment choices down to 39. Fifty-two investment options were removed from the PSP and 23 added, taking the number of choices from 71 to 38.

The changes to the GM 401(k) plan caught much media attention with reviews in Forbes, The Wall Street Journal, Market Watch, Detroit Free Press, The Flint Journal, Saginaw News, and Dow Jones Newswire, among others. There will continue to be much debate as to whether the new streamlined 401(k) plan is better for participants. In the end, however, the GM 401(k) plan remains among the very best in the country.

For any questions on the new SSPP or PSP, feel free to call Mainstay Capital Management toll-free at 1-866-444-6246 or send email to Mainstay@mainstaycapital.com.

Also, request a free copy of Mainstay Capital Management’s “Guide to Investing in the New SSPP & PSP"

SSPP Roth and PSP Roth
The Roth feature within a 401(k) plan allows employees to “tax diversify” their income sources for retirement. Employees have the flexibility to direct contributions among both types of 401(k) accounts as their current and future tax situation dictates. Additionally, for those GM  employees who are ineligible for a Roth IRA, a Roth 401(k) provides an opportunity to build a tax-free retirement income source.

We applaud GM for taking advantage of this provision in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). For any questions on this development in the GM 401(k) plan, feel free to call Mainstay Capital Management toll-free at 1-866-444-6246 or send email to Mainstay@mainstaycapital.com.

Request a free copy of Mainstay Capital Management’s “GM and Delphi Roth 401(k) Investment Guide”

Roth 401(k)s - Frequently Asked Questions

Mainstay "In The News" On The GM and Delphi Roth 401(k)

Mainstay Capital Management Sponsor of
UAW GM/Delphi - Day at the Races

ABC News Video: "Automotive workers seek advice on buyouts"

GM Moraine Assembly Special Attrition Program

GM 2008 Window Retirement Program

Promark Income Fund Frequently Asked Questions

Funding Healthcare Costs After Age 65

You have accepted the GM Special Attrition Package, now what?

For Your Interest

The Wall Street Journal
Getting Personal: Financial Planning Before The Buyout

Flint Journal, August 30, 2008
GM starts offering salaried buyouts

Detroit News, August 30, 2008
GM offers more buyouts

Grand Rapids Press, August 30, 2008
GM offers more buyouts to 8,000 salaried workers in Michigan

Bloomberg.com, August 29, 2008
GM Offers Early Retirement to 9,000 Salaried Workers

Pyramis Active Lifecycle Funds
The Pyramis Active Lifecycle fund family (Pathway One) is designed for those participants who wish to base their asset allocation decision on a specific target date, typically aligning the account with the fund that most closely matches their projected retirement date.

Eleven of these funds are included in the new plan, with 5-year incremental targets from 2000 to 2050. The further away the target date, the more aggressive the asset allocation. Conversely, the closer the date, the greater the emphasis on preservation of capital in the asset allocation.

Lifecycle funds hold some appeal in that they are simple to explain and administer. While this approach is unique, we believe the asset allocation decisions provided by these funds are crude at best. Lifecycle funds attempt to make decisions about asset allocation based solely on a target date. An investor’s tolerance for risk and financial goals are other key factors that should ultimately determine investment strategy and asset allocation. Additionally, they leave no room for the fund manager to tactically adjust strategy based on specific opportunities within the financial markets or in response to prevailing market conditions.

The returns realized in these commingled vehicles are diluted by a rigid adherence to mechanical allocation parameters. These parameters may prove to be shortsighted and inappropriate for everyone participating in the pool.  The real world changes every day, yet proponents of lifecycle funds expect someone to stick to a single game plan for as much as 40 years, whether interest rates are rising or falling, or whether the economy is in expansion or recession. While lifecycle funds offer a simple one-stop-solution, we continue to advise participants to avoid lifecycle funds and retain the flexibility to proactively adjust their portfolios as needed.

Company Stock
As a general rule of diversification, no single stock should represent more than 10% of your total investment portfolio. We believe this is a good guideline for ownership of company stock in your 401(k). Most individual stocks are much more volatile than mutual funds. To the extent you invest more in your company's stock, your overall portfolio will exhibit more volatility (risk), and retirement investing is not about hitting home runs, but about consistently hitting singles and doubles.

That being said, many corporations often match a portion of employee retirement plan contributions with company stock, offer employees attractive incentives to purchase company stock either within or outside of retirement accounts, or include stock or stock options as part of employee compensation. We recommend that employees take full advantage of these opportunities, but remember to keep their total company stockholdings within reasonable levels.

A Note on Institutional Funds
One theme in the new SSPP and PSP is the use of institutional funds in place of retail mutual funds. Here the plan architects are moving to investment options with lower internal operating expenses. (Institutional funds do not have the marketing costs associated with retail mutual funds that are ultimately passed along to the shareholders in the form of fund management expenses.) The problem with institutional funds, however, is the lack of publicly available information about the funds that is so readily available for retail mutual funds through the fund family’s website or other data retrieval services. This was one of the drawbacks of the Promark funds as investment options in the SSPP and PSP. As with the Promark funds, because of the lack of publicly available information, the institutional funds within the plan are not detailed in our Fund Tables.