Falcon20

I see a lot of guys saying that some of the R&I options are a no unless company funded. So my question is what makes it company funded vice self funded? DC cash is company money into the 401k that was redirected once IRS limits have been reached. As such I would think that since these are company funds if they are redirected into a different retirement vehicle besides the 401k one could argue that it is company funded. However, if you are accustomed to receiving that as income you might feel that it is self funded.

If you are in the latter group how would it need to be set up to feel that it is “company funded?”

GogglesPisano

I consider excess DC to be "Company funded."

Planetrain

Maybe in your case the savings wasnt worth it.

HSA max is about $6500/year for my family.
VEBA was going to be an additional $1000/yr of tax free for every pilot, regardless of DPSP Cash.

Add it up and compound over a career and it would have been a nice chunk of change for retirement to spend on medical bills. The $1000/yr was a floated idea to make sure it DIDNT turn out like United's where some pilots were projected with account balances of $250k+. 20 years at 6% ROR about doubles your investment, plus it was tax-free.

Maybe all your genetics/family history doesn't bode well for living to 90. But for me, this was a really good plan. The likelihood of me using this money is like 95%. The probability of me or my spouse using this is like 99%. If we both die, oh well, the Delta pilots get the money and my kids' inheritance is only slightly smaller since me and my spouse didnt live long enough to even put a dent in my 401k. The IRS law that doesn't allow it to go to my estate didnt matter to me since in almost every situation, the kids still get a big chunk of money.

flap

The UAL RHA is one dollar per hour contribution, so basically $1000 per year.

The additional contributions or "spillage" comprised of excess 415(c) and 401(a)(17) contributions along with vacation pay if desired.

This allows for substantial contributions if you want to take advantage by hitting pre and post tax contribution limits early, causing additional company contributions to spill.

This plan was misunderstood at first and met resistance, but the value is now apparent to all at UAL and we have many pilots actively cramming cash in prior to retirement.

Schwanker

Again, do Delta pilots get the money via a higher rate of return? Or does it go to to plan administrators/ALPA.

sailingfun

It’s all about who gets the write offs in the end!

https://youtu.be/XEL65gywwHQ

Planetrain

It goes to the plan's assets, not ALPA, not the administrator. You would get a higher ROR.

Schwanker

Good to know. I have a high distrust of ALPA administering anything that has to do with $$. The associated costs and intended investments would need to be clearly illustrated with someone other than ALPA with control of the plan.

Planetrain

DPMA is a VEBA. All the plan's income, expenses, and administrative costs are disclosed annually in a letter to all pilots. I would imagine the VEBA (that was proposed, but later shed during TA2) would have been admistratively similar to that. IRS sets most of the rules to prevent administrative fraud.

Denny Crane

It doesn't overcome it but it sure reduces it. You get an immediate 30-40% return on the MBCBP too. You just have to pay taxes on it when its withdrawn. That along with the fact there is an HSA to fund retirement medical expenses and the MBCBP goes into your estate makes me think it's a much better option.

Denny