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Strategies & Market Trends : Value Investing

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To: Harshu Vyas who wrote (74069)	11/15/2023 2:46:49 PM
From: Sean Collett	Read Replies (2) of 78519

Speaking of IBM, Sun Tzu on the Art of Investing forum, just posted about them changing their 401K policy. Starting Jan 1st they will be switching from a 401K to a Retirement Benefit Account (RBA) where IBM will no longer provide contributions. Employees can continue to put money into the 401K, but IBM is not matching anymore. The RBA is employer managed and looks like they don't have to set any money aside for this. IBM will guarantee a 6% interest rate on RBA returns until 2026 and then from 2027-2033 it will be tied to the 10-year US treasury with a floor of 3%. In 2034 is where it gets interesting as the returns will be whatever the US 10-year is. So if FED returns to ZIRP or something happens to IBM (credit downgrade or bankruptcy) then good luck to employees. If this takes hold though this could drive a shift in the stock market as well given how much 401K activity is tied up there. Will also be interesting to see how this starts to appear on the balance sheet. Will need to look more into this but wanted to share in the event anyone else had insight. Interesting move and could provide some further criteria into searching for value companies down the line. -Sean

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