FDXLAG

If the B Fund money is in a contract, they will have to continue giving you the money no matter what the IRS says. It may have different tax implications but it is still yours.

RedeyeAV8r

That isn't necessarily true. If the IRS laws change, the contract would have to be modified or amended to be in accordance with any new changes in IRS or Erisa laws.

Example a Lump Sum option on our "A" plan.

We currently don't have one but many of us wanted it. There is currently a debate within Congress to place a ban on Lump Sum distributions (Pension Relief Act). If congress does in fact pass a ban, Lump sum options would become null and void. What I am saying is, we could have spent a lot of negotiation Captial to achieve a lump sum option and with the stroke of a Pen, It is gone , courtesy of congress. And Fedex MGT would say "It isn't our fault , we are just obeying the Laws" (Just like they did in 1993-keep reading below)

The same thing goes for our B plan. Many people pretend to know what will happen to it if AGE 60 passes (or is overturned to be more accurate).
The truth is, nobody really knows how the IRS will rule. We all have our opinions but nobody truly knows what will happen. It is that unkown, that has many folks worried about Age 60 changes.

If AGE 60 does change, Yes we will still have a B plan, and yes the company will still make contibutions. The worry is "Will the contibutions be taxed before they are deposited?" Will it now count as income for w-2 purposes? That small potential, could drastically affect a B funds net worth over a 20 year career.

Many over 60 advocates say this won't (can't) happen. Maybe they forget the Omnibus act of 93. which capped the max income for retirment calculations. (many Retiring Fedex Pilots at that time lost 20-40k per year in Pension payouts.)
The bottom line is No one really knows what will happen.

dfwdavi8r

My mistake, I was just referencing the AA "contractor" plan. I don't think it will be going away or frozen for anyone. At AA there is talk of it being paid out monthly (taxed) and not into the the B-fund. No A-fund contribution. You take your lump sum and B-fund at 60 (solves some of the IRS issues) and continue to work. In affect, you are retired, but still working as a contractor until?????? Just what I have heard anyway.

RedeyeAV8r

There is a BIG difference between an 401's, IRAs and a B PLan.

IRA and 401K contibutions are optional and percentages are selected by you and come from your paycheck. The MAX amount per year is 15,000 for a 401.

B-Funds are negotiated. B-Funds match a negotiated percentage of your monthly gorss income and the company deposits these additional monies in a separate account. B Fund monies are in addition to your W-2. Money is not taxed (currently). B-fund limits are capped on a MAX of $220,000 a year. Whatever percentage is negotiated, If a Pilot makes 250,00 per year, the Max the IRS allows is a percentage of $220.
10 % B Fund $22,000/yr
7 % B Fund $17,500/yr
5 % B Fund $11,000/yr

These funds are in addition to your company sponsored 401k.
B-Fund does not count for Pensionable earnings. They are put into a separate fund. They are covered under a different IRS paragraph. You can see the potential pitfall if the contibutions become taxed before they are depositied.

767pilot

I don't see any way that the B plan will get automaticly frozen, remember, we have plenty of guys over 60 flying and earning B fund contributions daily. Where I think we WILL have an issue is the question of early retirements. Right now you take a big hit forgoing out at 55 vs 60. The IRS code requires that hit for those retiring before the normal retirement age. At UPS, the normal retirement age is 60. Did congress mean the UPS normal retirement age, or the FAA normal retirement age when they wrote the rules? I'll bet you that they meant the FAA age. I have a feeling that they will go with the one that brings the treasury the most money, a penalty for guys going out at 60 instead of 65.

FDXLAG

If the B Fund money is in a contract, they will have to continue giving you the money no matter what the IRS says. It may have different tax implications but it is still yours.

What part isn't necessarily true? They won't have to continue making contractually required payments or tax implications may change?

Of course it would have to be renegotiated but until then, what would an arbitrator say? No Fred you keep that extra money since the pilots don't get a tax break on it.

Lag

RedeyeAV8r

You weren't here in 1993 were you?

FDXLAG

I didn't think you had a contract in 93?

RedeyeAV8r

My point is No one really knows..............
In my opinion, Yes Fred would continue to give you your 6% (excuse me 7%)
in your B-plan every month........no skin off his back.

The IRS might say, hey that 7% is now taxable before it goes in your account.
So the potential is, that $1000-$1400 that is put in every month now gets taxed before it goes in and you get a net $600-900 deposited. There won't be any negotiation if it becomes law.........just like our A fund pensions back in 1993. Get my point. It is all hypothetical until the IRS or Congress acts.

FDXLAG

I agree 100%, however if it is taxed it wont go into some stupid account, I will be able to use it however I want.