RonRicco

What are they estimate acting guys with 10-15 years left will have?

I fall into that group and would love to see the number compared to my numbers.

Trip7

It was addressed very briefly and then the rest of the presentation went back to selling the tax savings. It was not addressed clearly because you have many pilots and at least one rep stating you need to 60ish percent return on your DPSP Cash to match the MBCBP return. This what happens when you present information like the first attached picture. Why compare after tax DPSP dollars to Pretax MBCBP Dollars? To make matters worse, they used the comparison to determine FAE. That is Bernie Madoff like misinformation. The presentation lost all credibility for me after I saw the slides. If the presentation wanted to convey transperancy they would have attached something similar to attached tax chart.

The Union should be trying to extract as much value as they can for our next contract. They should not be trying to act as our CPA and/or financial planner.

exitrow

They weren't estimating what guys in that group had saved. Some guys in that age range lost a pension, some were military, some were regional FOs for a decade, it varies too much. They are just trying to explain the mechanics of how these plans work since they fall under the DB label they sound scarier than they are.

Gspeed

I think there's a valid point that needs to remain at the forefront of the discussion: no one knows what the tax brackets will be when each of us retires, whether that's 2, 5, 20, or 30 years from now. And none of us knows if the rules governing 401k savings limits for high earners will also change. This plan would be but one way to hedge ourselves against any of these unknowns. A diversified portfolio is a good portfolio and I view this in a similar light.

Additionally, I'd wager that most (not all, but most) Delta pilots will be in a lower tax bracket when they retire compared to when their DPSP cash is getting taxed on the front end. So the difference between the pre- and post-retirement tax brackets in addition to whatever returns the MBCBP makes could be fairly lucrative to the majority of Delta pilots.

exitrow

They are not trying to act as our financial planner, that is an unnecessarily dramatic statement. They determined FAE from total retirement dollars, what is wrong with that? When pensions were around were people promised 60% FAE after income taxes were paid?
Yes, some people may have forgotten that they still have to pay income taxes when withdrawing MBCBP money, then the question was asked then clarified and everyone moved on.
If pilots are still confused then help explain the misunderstandings. Don't act like this is all some sinister plan. The union is trying to extract value by having a place for the company to pay us more tax deferred dollars for retirement. We shouldnt have to pay taxes on retirement money now. While this plan would mean we can't spend our excess dpsp cash on our boats, that just means we need a big fat raise on top of retirement gains.

LeineLodge

Who among us has a marginal tax rate of 40%?

It seems to me that they are painting the worst possible scenario, that many of us do not face, to amplify the benefit of the tax arbitrage - which I see as the only benefit to this plan.

Leave our current system alone, other than increasing DPSP contributions from the company.

If they can THEN eek out some more $ from the company and want to fund a separate program then fine. I’m not interested in any program that forces DPSP cash into a vehicle that I don’t even really want.

Trip7

Today most pilots would likely fall from 33% bracket to 28%. You're willing to give up control of your DPSP Cash today for a plan manager's targeted 5% return in hopes you might save 5% at some future date providing tax rates and brackets stay the same? I sure wouldn't. Even if I did I wouldn't want to force my conservative strategy on everyone.

There are other asset classes that a pilot can invest their DPSP Cash in that will produce far greater after tax dollars. Our DPSP Cash is a negotiationed benefit that is the envy of the rest of the industry. Every pilot has the right to do as they see fit with it.

Secure the Bag

Crown

this hits the nail on the head. I've voiced this to other pilots - once I get to the point that I'm able to get extra cash, let me decide what I want to do with it. Even though it's taxed and I fully understand the ramifications of taxed vs. no tax, it's ultimately still cash. I can put it towards my mortgage, help my folks, invest in a friend's business, or just go to the ATM and withdraw it and stick it under my mattress. That's the great thing; being able to do whatever I want.

As I've said, I'm totally fine with adding an additional form of a retirement vehicle, but it has to be at the pilot's option. Furthermore, if any additional retirement comes from the pilot's pocket and not the company's (in other words, costs the company 0 dollars) negotiate for this outside of Section 6. Don't waste negotiating capital on it. There's way too much work to do with improving scope and QOL items.

sailingfun

Most plans that offer tax advantages to both the company and employee are all or nothing plans per IRS regs. If you require a plan to be optional you pretty much eliminate everything other than straight cash once you have reached 415 C limits.

tunes

on gains, not contributions to a roth.....