PilotJ3

Theres no plus up. This is not a pension, they will just put your excess 401k in the account. Once you’re retired, they won’t put anymore money, because that money was from your 401k excess amount. That’s it…

Trip7

Theres a significant percentage of the pilot group within 5-10 years of retirement. This plan will benefit them and they should opt in. Also all new hires after Jun 1st are forced in. Union should have enough participation

First Break

Wrong. The text he quoted is from the Notepad that was just released. Have you read it?

First Break

Having talked to a financial advisor very familiar with these plans, it sounds like most MBCBP plans in the wild are invested much more conservatively than the proposed strategy in this plan. He said several plans he knows of are 100% bonds, with others being effectively a money market.

As has been discussed numerous times in this very thread- rebalance your 401k to account for the assets in the MBCBP with a more moderate risk profile and pocket the tax advantage.

Unless you are shooting for the moon with every penny you have, this strategy has absolutely no opportunity cost which seems to be what some are fixated on.

And the tax arbitrage available is absolutely a real thing at the income levels we are talking about. The fact that these plans are enormously popular with other high income earners, even at a lower rate of return, must mean something. The example outlined above does not give a realistic depiction of marginal versus effective taxes.

Rinaldi

is that necessary? You have until the end of July to opt in/out. Will they take money before then?

Planetrain

No, it’s not necessary.

(See DALPA R&I 22-03 update for best explanation)
-My annual income level typically exceeds the $330k “trigger”. ($52,800 401k contribution)
-My personal contributions plus the company’s 401k contributions almost always exceed the IRS max.
-If you front loaded your personal 401k contributions (from say profit sharing or a high initial personal rate), you would hit the “cap” early. I usually hit around September/October and accept the “DPSP Cash/401K Cash” as additional income.
-Under the MBCBP opt-in, any dollars that would be “401k Cash” would now be unilaterally diverted to the MBCBP once implemented.
-If I drop my personal contributions to 0, it delays the excess cash to a later date and will divert those dollars now to just regular income. (Someone mentioned after-tax 401a contributions might accomplish the same goal of diverting dollars from MBCBP)
-To be clear, there are 3 caps: 2023 $330k income cap - $52.8k, personal cap $22,500, combined cap $66,000. (I’m ignoring the age 50 $7,500 catch-up)
-To Gunfighters point, not much you can do about the $330k cap

If I usually hit the cap(s) in September, this will push it maybe a few weeks later. Just buying time to see how much I like the MBCBP and whether or not I want to artificially spill more in or use other methods not to be a part. I’m leaning to opt-in.


BTW here is the LIRKX makeup (if this really is the fund?):
Name Weight (%)
BLACKROCK RUSSELL 1000 INDEX FUND 22.42
iShares U.S. Int Gov Bnd Idx Fd 17.63
iShares U.S. Secur Bond Index Fd 15.42
ISHARES MSCI TOTAL INTL STOCK ETF 12.58
iShares U.S Int Credit Bd Idx Fd 9.23
ISHARES TIPS BOND ETF 7.96
iShares U.S. Lg Gov Bnd Index Fd 7.04
BLACKROCK SMALL CAP INDEX FUND 2.98
iShares U.S. Lg Credit Bd Idx Fd 2.34
ISHARES DEVELOPD RL ESTAT CL K 2.19

Gunfighter

When you are working 60-80 hours per week as a doctor, lawyer or executive to build a cash pile as a monument to your own success, these plans are phenomenal. They provide a tax deferral option for spill over funds that can be withdrawn in retirement. The tax arbitrage is a great play when taxable income exceeds 400k in earning years and drops below that in retirement. This is a good fit for most pilots in the last decade of their careers.

Much of the angst comes from pilots with a longer time horizon who enjoy the freedom our work schedule provides. They spend time outside of Delta pursing other interests. Whether those interests are financial or recreational in nature is irrelevant, the value is in having choice. Keeping score in a family memories account vs a retirement account is a very real paradigm. Using extra time and money while building a secondary income stream is another pursuit valued above growing a cash pile.

You can have a seven figure year with an effective tax rate in the teens when done outside of a W2. Our pilot group has more outliers than the typical demographics for this plan, that is where the discussion comes from.

BusDrvr

Oh, I understand. You are attaching life insurance that you probably don't need to an investment vehicle that you are committed to because of the life insurance component.

bugman61

The 60% bonds is the result of an IRS requirement.

m3113n1a1

How you can say something completely incorrect with such confidence and self assuredness blows my mind!

Another thought: what it a large chunk of Delta pilots retire in a down market in the future..I wonder how expensive it could get for the company to plus them up.