“This is a significant takeaway,” Nelson Phelps, 70, of Aurora tells The Denver Post of Qwest’s decision to eliminate death benefits for many retirees. “If I died today, my wife would receive $117,000. If I die March 2, she would receive nothing from that.”

Retirees tried to prevent Qwest from cutting their benefits in a 2005 lawsuit but lost their appeal this summer. Qwest began notifying thousands of former employees Monday that the so-called death benefit, which pays beneficiaries an amount equivalent to the retiree’s last annual salary with the company, will be eliminated effective March 1, 2010, a move that could reduce the Denver-based company’s liabilities by some $220 million.

The action, according to the company, is meant to protect the Qwest pension fund’s “ability to meet obligations of current and future retirees” and comes after Joseph Euteneuer, Qwest’s executive vice president and chief financial officer, told the Denver Business Journal that the telecom increased the size of its revolving credit by 22 percent.

Qwest has not yet drawn on the new credit but could use it “to provide liquidity for general corporate purposes, including working capital, capital expenditures, and debt refinancing.” Meanwhile, Qwest’s former chief executive, Joe Nacchio, sentenced to six years in prison for insider trading, may receive a lighter term after all (via the Post).