GM RSP and PSP Plans

Introduction

With over 30 investment options available, the Retired Savings Plan (RSP) for salaried employees and Personal Savings Plan (PSP) for hourly employees are among the best in the country. With this large number of funds, there is ample opportunity to build a well-diversified portfolio for your GM 401k savings.

For your reference, we have provided a fund table displaying style, risk, and past performance for many of the funds in the RSP and PSP plans. In addition, please visit our “Fund Commentary” section below for further information on specific funds and/or fund types within the RSP and PSP accounts.

To the right you will find articles of interest as well as news and updates to General Motors employee and retiree benefits. Check this page for future updates to the RSP and PSP plans, as well as news that affects General Motors employees and retirees.

News and Updates

GM Profit Sharing Payment – February 1, 2012

General Motors has announced that in the event of a payout under the Profit Sharing Plan for Hourly-Rate Employees, GM-UAW represented employees will have the option to have a portion (up to 100%) of the Profit Sharing payment contributed to their Personal Savings Plan (PSP). There is a very short window, ending on February 7, 2012, in which employees may elect their desired percentage to defer. If no action is taken, employees will receive their entire Profit Sharing payment in cash.

It is important to keep in mind that the IRS limit for pre-tax contributions can not exceed $17,000 (or $22,500 if age 50 or older) for 2012. However, contributions can still be made to the PSP after reaching the $17,000 threshold. Your weekly contributions will automatically spill over as after-tax once the pre-tax limit is reached. There is a total contribution limit of $50,000 (or $55,500 if age 50 or older) for 2012.

If you have questions on how much of the Profit Sharing payment you should contribute to the PSP relative to your personal situation or how the election of the Profit Sharing payment to the PSP could impact your contributions for the remainder of 2012, contact Mainstay Capital Management toll-free at 1-866-444-6246 to speak with one of our advisors.

RSP & PSP Fund Change Announcement – January 2012

General Motors has announced a change in the share class of the Ariel Fund in the Retirement Savings Plan for salaried employees and the Personal Savings Plan for hourly employees. This change will impact the Ariel Fund in the savings plans effective as of the close of business on February 6, 2012. The new share class for the Ariel Fund (ARAIX) will provide the same investment strategy and risk, but the overall expenses for the fund will be lower. Although the fund code and ticker symbol will change for this investment option, there will be no other material change, with the exception of the lower expense ratio.

Mainstay Capital Management’s CEO, David Kudla, has spoken and is published on the subject of reducing fees (internal expense ratios) for investment options within 401(k) plans. To read his article penned for Forbes, "Why Investment Choices In Your 401(k) Might Change", visit Mainstay’s "In the News" page.

If you would like more details or have questions about how this share class change could impact your portfolio, contact Mainstay Capital Management toll-free at 1‑866‑444‑6246.

GM Separation Package – Phase II – October 2011

General Motors is again offering a 2011 Special Attrition Program (SAP) to thousands of employees. The decision to accept any separation program requires careful analysis and planning on the part of each employee.

For those evaluating a buyout offer, there are important factors to consider:

• Am I financially ready to go?
• Have I developed a comprehensive Retirement Income Plan?
• How will the SAP impact my retirement plan?
• Are my investments allocated appropriately for this life event?
• What should I do with the assets in my 401(k)?
• Which distribution method for pension benefits is best suited for my personal situation?

Mainstay Capital Management is a fee-only, independent investment advisor that has counseled hundreds of GM employees on buyout offers. Mainstay currently provides portfolio management and retirement planning services to thousands of active and retired GM employees. We can provide a comprehensive Retirement Income Analysis, help evaluate "what-if" scenarios, and assist in making informed decisions concerning any buyout offer.

Call Mainstay Capital Management toll-free 1‑866‑444‑6246 to discuss your personal situation with a Retirement Planning Specialist.

RSP & PSP Fund Change Announcement – June 2011

General Motors has announced upcoming investment option changes for the Retirement Savings Plan (RSP) and Personal Savings Plan (PSP). Several existing investment options will be removed from the plans and new options will be added. The transition to the new fund lineup will start at the close of business July 15, 2011 and come to an end August 26, 2011. If you have questions about how this new fund lineup could impact your portfolio, contact Mainstay Capital Management toll-free at 1‑866‑444‑6246.

GM Salary Enhanced Variable Pay (EVP) – January 2011

General Motors salaried employees that are eligible under the Enhanced Variable Pay (EVP) Plan may be trying to decide how much, if any, of the potential EVP payout to contribute to their Retirement Savings Plan (RSP). Participants are eligible to defer up to 80% of their EVP payout on a pre-tax basis (not Roth or after-tax) to the RSP in 10% increments.

It is important to remember that any amount of the EVP payout that is elected to be deferred to the RSP will be combined with the pre-tax and Roth contributions that are deferred to the plan throughout the year. The limit on these contributions for 2011 is $16,500.

Contact Mainstay Capital Management toll-free at 1‑866‑444‑6246 to speak with one of our Certified Financial Planners^TM to discuss how deferring a portion of your potential EVP payout would impact your personal situation.

GM Salary 401(k) Plan Name Change – January 2011

Effective January 1, 2011 the GM Savings Stock Purchase Program (SSPP) was renamed to the GM Retirement Savings Plan (RSP). Communications and plan literature will be updated accordingly.

GM Separation Package – December 2010

General Motors is offering a 2011 Skilled Trades Special Attrition Program (SAP) to skilled trades employees at 13 of their U.S. facilities. The decision to accept any separation program requires careful analysis and planning on the part of each employee.

New Options Available in Roth 401(k) Account – November 2010

General Motors is offering their RSP and PSP 401(k) participants access to two new features in the Roth 401(k) account currently available within these plans.  Effective November 1^st, a new distribution feature allows a participant to make withdrawals directly from their Roth 401(k) account without having to first pull from their traditional 401(k) savings plan account. Also, effective December 1^st, a participant can convert qualified distributions from their traditional 401(k) savings plan account into their Roth 401(k) account. Any amounts converted to the Roth 401(k) are taxable, with the exception of after-tax contributions. Conversions processed before December 23, 2010 can defer any tax liability owed over the next two years. For more details, refer to our Special Report “New Options Available in the GM Roth 401(k) Account”.

GM Reinstates Matching for RSP Participants - October 2009

In the past several years GM has instated, adjusted, and suspended the RSP company match several times. On October 1, 2009 GM once again reinstated the company match. The match is $1.00 for each dollar you contribute up to 4% of your eligible base salary. This is calculated as 4% of your base pay for each pay period. GM will match any pre-tax, post-tax, or Roth contributions. There is no match on catch-up contributions. Mainstay recommends that all GM salaried employees are contributing at least 4% in order to take advantage of the reinstated company match.

GM’s Health Plans in 2010 will be HSA Qualified – October 2009

In 2010, GM's health care plans become Consumer Driven Health Plans (CDHP) that are Health Savings Account (HSA) qualified. An HSA is a great tax-advantaged way for participants to save money. Contributions are pre-tax, grow tax deferred and are withdrawn tax-free for medical expenses. Starting in 2010 GM will open an HSA for each salaried employee and make a $1,300 contribution. If you do not intend to immediately use the funds in your HSA, you may want to consider investing these funds utilizing our suggested investment allocation. For additional information on the HSA and our suggested model portfolios, visit our special report titled Heath Savings Accounts.

RSP 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)

Fund Commentary

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 largely play a roll in determining investment strategy and asset allocation. Additionally, they leave no room for the fund manager to tactically adjust the 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.

A Note on Institutional Funds

One theme in the new RSP 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 RSP 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.

Fund Table - December 31, 2011

The General Motors RSP and PSP fund table provides critical data on investment options within the plan.

  GM RSP and PSP - Fund Table                                                                                 

If you have any questions concerning our website or your GM 401(k) account, please feel free
to contact us using the following email link: Mainstay@mainstaycapital.com
or call us toll-free at 1-866-444-6246.

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