401k USAirway common stock fund losers unite!

[AgMedallion]

U employees always had the option to invest in other stocks. In fact, those other funds existed first. My gripe with U mgt, among many other gripes, is that I'm sure Fidelity didn't come up with the idea of a U stock fund. I'd bet it was instigated by U mgt in an effort to support the value of U stock and thus the value of stock options granted to Wolf and Company. Sure, they'd claim they wanted to give U employees the the chance to invest in their future. But we all know that's fecal matter. If those employees wanted to invest in U, they could open a regular stock account (even an IRA) with any broker and buy it on the open market. It's not like they were getting it at a special price through Fidelity's US Airways stock fund. The ones this really cheated were the customer service folks who had their pensions taken away years ago. All they had were 401Ks. These can be fairly safe over the long term if you buy funds based on the S&P 500 or some other broad based index. But investing your retirement money in an airline stock, even a group of airline stocks, is almost suicidal. Investing in a debt ridden, mismanaged one like US Airways is even worse than that. Thankfully, I have never invested a penny in U's stock, other than what's automatic through the ESOP program, which is basically peanuts. I feel VERY sorry for the customer service folks who not only had their pension stolen, but then were offered a crapshoot of an investment for their 401K money, namely the US Airways stock fund. I'm sure there are some who have lost many thousands of dollars through this brilliant idea of Wolf & Co. I'd be surprised if some kind of class action suit wasn't filed on their behalf, against Fidelity, US Airways, or both. They deserve whatever damages they can collect.

 

[7.5victim]

And hadn't US been losing money prior to 9/11? Blaming the bankruptcy COMPLETELY on the after effects of the terror attacks is a flawed strategy...

 

[Bear96]

Didn't you have the option to invest in other stocks?

 

[simfixer]

AS stated in our bankruptcy filing, the reasons we filed for bankruptcy were a extended merger review by the govt, and the effects of the terrorist attacks on the airline industry, USAirways in particular. Logic would dictate then that (we will leave the govt out of this) if the bankruptcy was caused by the events that took place on 9/11, then our retirement funds invested in the USAirways common stock fund were victimized by the terrorist attacks as well. These funds, being of tax deferred status, just evaporate, while a normal investor can at least use his loss as a
tax writeoff. What I am suggesting is legislation permitting the use of realized loss in the 401k USAirways common stock fund as a loss on this years' and future taxes. This way, even though the terrorist attacks devastated many peoples' retirement accounts, they would have an opportunity to start rebuilding them through an IRA or by after tax 401k contributions.
Send letters to your representatives asking for tax relief legislation for USAirways employees whose holdings in the USAirways common stock fund became worthless due to the events of 9/11. Tell everyone you know who was affected by this and anyone who cares to write. All addresses are easily found using any internet search engine.
Pennsylvania - Rick Santorum
Arlen Specter
North Carolina - John Edwards
Jesse Helms
Washington DC - George W Bush
It wouldn't hurt to email Dave S. as well, asking him to try and use some political pull to help out his crew.

 

[sp300]

How about this-
If you had shares of company stock in the 401k, equivalent to 5,000 street shares, then the company should give you 5,000 options at the IPO price.

 

[Oliver Twist]

Here is one for discussion- I think Wolf and Gangwal and the senior VP's/Board Members should have to pony up like the Enron/MCI guys will be shortly. I have a feeling that they all have lived VERY WELL off USairways. I think we would all be shocked at how well they really are doing with our company profits. And how about all those brilliant ideas to save the company. Metrojet, High Ground, Merger, BWI cuts just to name a few. Money pits for sure. But how much of the money when to them?? What about the Board of Directors who approved it all, should they not also bear some responsibility?? After all, without them, our stock and 401k money might NOT be in the toilet.

 

[simfixer]

sp300,
Even just an acknowledgment of the unfortunate situation by the new improved management would be something. Apparently for some reason they have chosen not to address this matter. I find this unusual considering the high percentage of shares held by employees in the fund. Is there a reason they wouldn't want to draw any attention to this? Maybe they will come out with something like you suggested and that would at least be a positive gesture. However, due to direct repercussions from the tragic events last year, which affected USAirways more than any other airline, USAirways has found itself in dire straits, and a little relief for tax deferred investors does not sound unreasonable, particularly when you take into account the effects of the Justice Departments hyper extended review of the merger with UAL and the lengthy closing of DCA. I wouldn't mind seeing tax deferred investors in Enron get a break either.

 

[JS]

Simfixer, there are two problems with this.

One is that it makes no sense for a realized capital loss to be tax-deductible if you didn't pay income taxes on the investment to begin with.

Secondly, why stop at U? How about UAL? AMR? LUV? Boeing? Wyndam? Prudential? Wendy's? etc.

Investing in stock is a risk. You win some, you lose some. Why should the taxpayer subsidize stock losers? Taxpayers subsidize others enough as it is.

 

[simfixer]

js,
Wendys? Don't be ridiculous. Enron, Tyco, Worldcom, or any company that the investors were enormously cheated, maybe. Companies such as USAirways where the terrorist attacks and the governments reaction to them pushed them into bankruptcy, definitely. The govts 2 1/2 year merger review didn't help thing along too much either. As far as taxes are concerned, they will be paid when the money is withdrawn. The amount that people would be able to deduct would be against income, and is so small that spread out over a few years wouldn't be noticable to to the govts bottom line. Considering the difference it could make to hard working people who are largley responsible for creating the wealth of the richest nation on earth, many who had their retirements devestated by extraordinay circumstances, it is unlikely that anyone with the slightest bit of compassion would begrudge them being given a little help. Of course there are those, and I knew you would show up, who probably complain that disaster relief is unfair because someone is getting something that they are not. Thanks for helping.

 

[JS]

Simfixer, the stock market is a risky investment. It's that simple.

Disaster relief is a different story. How can you equate a city sustaining heavy damage from a hurricane with investing in the stock market? The former is just life; the latter is a risky investment. They aren't even in the same ballpark.

As far as retirement is concerned, anyone who puts most of their investment in one stock is an idiot and deserves nothing if the stock crashes. Betting the farm on one stock is just as foolish as betting the farm on a horse race.

 

[simfixer]

As far as retirement is concerned, anyone who puts most of their investment in one stock is an idiot and deserves nothing if the stock crashes.

js,
I will agree that it is not prudent to put most of your investment in one stock, but remember, this investment option was put into an employee retirement plan, and the reality is that most of the people participating in such a plan are far from being sophisticated investors such as yourself. In fact, most of them don't know what they are investing in, and if you ask them which options they selected, many couldn't tell you without looking it up. However, this does not mean that they are idiots as you suggest, they are only inexperienced. Idiots don't fly, maintain, and dispatch jets that safely transport millions of people. And as far as deserving nothing if the stock crashes, that would depend on why the stock crashes. In this case the stock crashing can be directly attributed to repugnant acts of terrorism, which affected airlines, and USAirways in particular. USAirways was already in a weakened state due to its inability to restucture while it was waiting 2 1/2 years for the govt to decide on the merger with UAL. Then as a direct result of the attacks,the govt closed DCA (from which USAirways derived 10% of its revenue)for weeks. That, coupled with the severe decline in passenger boardings in the East (USAirways' main area of operation), also resulting directly from the terrorist (these are the people you should be calling idiots) attacks. Considering the huge amount of tax dollars put into the govt coffers by the airlines, it seems reasonable that when extraordinary circumstances cause the people responsible for making the airline run lose retirement funds, the govt could give them a little break. I'm not advocating giving them all of their money back, just a little tax break. After all, govt indecisions and policies played no small part in USAirways stock crashing.

 

[FL370]

If you support a tax break for losses on money in tax deferred 401k accounts, then I suppose you would have no problem with me taking a tax break on retirement accounts that were set up with after tax money? Roth money is taxed prior to investment yet capital losses are not tax deductible.

This will never happen! It would cost the government billions of dollars.

People should not invest retirement money (even 401k money) in the blind. If they aren't willing to learn about these investments they deserve what they got. Thet are better off letting the money get taxed and deposit it into a saving account or heading to Vegas.

I have heard a few stories where a few smart Enron employees who felt the companies stock was overpriced, were taking the company match that was invested in Enron stock out immediately. Of course they could only do this if they were vested and they had to pay capital gains in addition to the 10% penalty. Eventually Enron put a stop to this by freezing the sale of company stock out of 401k accounts.

 

[deelmakur]

One of the unfortunate byproducts of flushing your company to screw the lenders is you also get the stockholders. If the interests of the employee and the stockholder converge, by virtue of them being one in the same, that's doubly unfortunate. Good thing the company didn't do anything to piss off the regular customers, though, because that might be a problem in fixing the place.