QUESTION: Is there a federal law requiring employers to vest employees in pension plans after five years? If so, please explain the law.
— E.M., WINTER PARK
ANSWER: The Tax Reform Act of 1986 changed the vesting rules for the nation’s company pension plans. Effective Jan. 1, 1989, employees who have worked five years for a company must be vested in their company’s pension plan. Vesting gives employees non-forfeitable rights to receive benefits from the pension plan.
Rather than vesting employees after five years, companies can choose another method. The company would vest employees 20 percent after three years of service and then increase the level of vesting by 20 percent a year until the employee was 100 percent vested after seven years.
Q: I am a shareholder of Computer Products Inc., a company in Pompano Beach. In view of the company’s internal problems and its low stock price — now less than $2 a share — do I need to be concerned about my investment?
— A.T.B., WINTER HAVEN
A: The worst may be over for Computer Products, according to Robert Anastasi, a stock analyst for Robinson-Humphrey Co. Inc., a regional brokerage based in Atlanta.
Computer Products is the nation’s second-largest provider of devices that convert electrical power from one form to another. The company was hurt in 1985 by having to pull one of its products, which was riddled with computer glitches and snafus, from the market. It suffered another blow in 1985 when it discovered accounting irregularities and inflated revenue and profit reports within one of its divisions.
Needless to say, Computer Products had to readjust its finances, reduce operations and change its management. Another negative consequence for the company was a loss of $9.3 million, or 47 cents a share, in 1986.
Computer Products is a suitable stock for investors willing to bet that a small company can turn around, Anastasi said.
Computer Products is not a complete gamble, he said, because its products are well-accepted.
Q: I am sure U.S. Photo Supply Co. Inc. is dead, but I think there is some hope for Fotochrome Inc. I believe Fox Photo Inc. took over Fotochrome and Eastman Kodak took over Fox Photo. What can you find out?
— F.B.H., ORLANDO
A: If U.S. Photo Supply and Fotochrome were snapshots, they would be blank, according to Robert Fischer, vice president of R.M. Smythe & Co. Inc., a stock research and collectibles company based in New York.
U.S. Photo Supply, incorporated in Delaware in 1955, had its charter of incorporation forfeited in 1966.
Fotochrome, incorporated in Delaware in 1960, went bankrupt in 1975, Fisher said. Its stock is worthless. Fox Photo Inc., a retailer of photographic services and supplies, never acquired Fotochrome, company officials said.
Eastman Kodak Co. acquired Fox Photo in 1986.
