VIP gets more flexibility

New features help retirement benefit meet individual needs

BY JUNU KIM

Richard Cole, a finance manager with Shared Services Group in Bellevue, Wash., plans to retire in a few years. To better prepare for this, Cole has taken advantage of an enhancement to Boeing's Voluntary Investment Plan savings program.

Boeing has raised the VIP's employee contribution limit to 20 percent of base pay, up from 15 percent. After calculating how many dollars would move from his paycheck to his VIP account, Cole, 61, elected to increase his VIP contribution to more than 15 percent.

"Retirement income is a real critical issue at my stage in life. I need to build up my [VIP account] so I have greater income flow after retirement," Cole said. "I'm very pleased to see the company raise the limit to 20 percent." Prior to the increase, data shows roughly one-third of those who contributed to the VIP were doing so at the maximum level.

The higher employee contribution limit is one of several enhancements to the VIP. These new features provide the program's more than 131,000 contributing members more flexibility to save for their future needs. Indeed, the VIP is designed to work together with the Boeing pension plan, Social Security and personal savings.

"Employees have personal goals for ‘income replacement' to meet their families' needs and lifestyle preferences during retirement," said Laurette Koellner, Office of the Chairman, and Chief People and Administration Officer. "The VIP enhancements are designed to support higher levels of savings as employees manage their individual total retirement income strategies."

Enhancements included:

• Increased employee contribution limit. For most employees, the contribution limit is now 20 percent of base pay on a pretax or after-tax basis—or as a combination of both. VIP participants can use this feature to increase their savings for retirement, as SSG's Cole has done.

This feature does not affect the matching contribution made by Boeing. It also differs from "catch up" contributions, which permit savings plans to offer participants age 50 and over the option to make additional contributions. Boeing intends to implement the "catch up" contributions feature during 2003.

The increased contribution limit currently is available to all nonunion employees and certain union employees.

• VIP dividend payout option. Eligible participants who have any part of their VIP account invested in the Boeing Stock Fund now have the option to receive a 100 percent cash payment of dividends.

This feature lets participants take a payout of their Boeing Stock Fund dividends in lieu of having dividends reinvested in that fund. The trade-offs to participants, however, are that taking a dividend payout can lower their total VIP balance at retirement, and payouts are subject to federal and state income taxes.

Participants wishing to continue automatic reinvestment of dividends need not adjust their accounts. Once an election is made, it will remain in place until it's changed. This permits a payout one quarter and then a dividend reinvestment the next quarter.

Participants can make their choice by using the Boeing Savings Plans Online Web site or by calling the Boeing Savings Service Center at 1-800-553-9809.

The dividend payout program currently is available to all current and former nonunion and certain union employees who have all or a portion of their VIP account invested in the Boeing Stock Fund.

• Customizable statements available online. Participants can now create a customized account statement at any time via the Internet.

These statements can cover any date range within the past 15 months and can include up-to-date data. Participants can decide which information they'd like to see and can print a report for their own records (see story on the next page for instructions). In the future, participants will receive in the mail an annual statement with Dec. 31 values.

This VIP enhancement "lets participants create a customized statement whenever they want from any computer that can access the Internet," said Gary R. Wilson, senior manager, Employee Savings Plans. Wilson added that the ability to create account statements at any time allows employees to track investments based on individual needs.

junu.kim@boeing.com