End of 2019 salary survey
02-11-2020, 02:18 PM
#661
Gets Weekends Off
Joined APC: Jun 2015
Posts: 4,116
I haven’t read anything that limits the employer amount with the exception of the $285k limit and $57k 415c limit. At SWA 285k will get you 42,750 in the 401k pot. The other 14250 is up to you (under 50). There is the option to get the rest in cash or excess fund at our place. Not sure where the $37k you speak of comes from. Sometimes things are lost in translation and I may not understand what is trying to be said.
The remaining $37K can be filled with pre tax employer contributions or after tax employee contributions or some combination of both to fill to the annual limit for 2020 of $63,500.
Its the pre vs after tax one has to consider. If ones employer fills the $37k bucket and the employee fills the $19.5k and if age 50+ the $6.5k bucket.....the entire annual contribution of $63.5k for 2020 is pre tax.
As a fyi.....if one is filling any part of the annual limit with after tax money.....there may be available strategies to move the after tax part to a roth ira.
02-11-2020, 02:31 PM
#662
Gets Weekends Off
Joined APC: Jun 2018
Position: 757 CA
Posts: 616
Referencing the posted code section om contribution allocation limits. 2020 Employee lpre tax contribution limit is $19.5k. If over age 50 additional $6500 pre tax.
The remaining $37K can be filled with pre tax employer contributions or after tax employee contributions or some combination of both to fill to the annual limit for 2020 of $63,500.
Its the pre vs after tax one has to consider. If ones employer fills the $37k bucket and the employee fills the $19.5k and if age 50+ the $6.5k bucket.....the entire annual contribution of $63.5k for 2020 is pre tax.
As a fyi.....if one is filling any part of the annual limit with after tax money.....there may be available strategies to move the after tax part to a roth ira.
The remaining $37K can be filled with pre tax employer contributions or after tax employee contributions or some combination of both to fill to the annual limit for 2020 of $63,500.
Its the pre vs after tax one has to consider. If ones employer fills the $37k bucket and the employee fills the $19.5k and if age 50+ the $6.5k bucket.....the entire annual contribution of $63.5k for 2020 is pre tax.
As a fyi.....if one is filling any part of the annual limit with after tax money.....there may be available strategies to move the after tax part to a roth ira.
Which we have at FedEx in the form of an In-Plan After Tax automatic Roth Conversion. But I'm not sure that IRA is a proper term to associate with it as there are Income limits on IRA contributions.
02-11-2020, 02:36 PM
#663
Gets Weekends Off
Joined APC: Jun 2015
Posts: 4,116
02-11-2020, 02:43 PM
#664
Gets Weekends Off
Joined APC: Nov 2017
Posts: 2,141
Actually it does bear at least some consideration. In the posted fedx example the pilot achieves full 415 limits by adding about $11k per year of after tax income.
This comes out of a pilots disposable income.
So it does matter. Just as much as it does in my pwa case. I require no use of after tax disposable income to fully fund my 415 limits. So you see It is a complex calculation.
In some cases not only is no after tax disposable income required, but once 415 employer contributions are satisfied....the excess reports out as payroll income. In so e cases this is a substantial amount. Maybe $40K+/year at high end.
Simply applying this excess funding to any number of after tax investments could add 7 figures or more to a pilots career financial results.
This comes out of a pilots disposable income.
So it does matter. Just as much as it does in my pwa case. I require no use of after tax disposable income to fully fund my 415 limits. So you see It is a complex calculation.
In some cases not only is no after tax disposable income required, but once 415 employer contributions are satisfied....the excess reports out as payroll income. In so e cases this is a substantial amount. Maybe $40K+/year at high end.
Simply applying this excess funding to any number of after tax investments could add 7 figures or more to a pilots career financial results.
No actually, it’s not relevant. What is relevant is that your airline provides 16% company contribution and FedEx provides 9% and a pension. What you or I decide to do with disposable income is completely irrelevant. If you want to say that 16% will provide you more income than 9%, that is completely fair just as saying you make more in regular wages than someone else, provides more income as well. Whatever you decide to use that extra income for is not relevant when comparing total compensation from different airlines. The IRS rules are the same for all pilots. That’s a constant. What changes is pilot contracts and how that effects regular wages, deferred compensation, days off, etc. Thats what was being compared on this thread.
02-11-2020, 04:14 PM
#665
Gets Weekends Off
Joined APC: Apr 2016
Position: Looking left
Posts: 3,418
Delta also has an automatic in plan conversion where we contribute to 401k using 401(a) after tax money and then it automatically converts in plan to our Roth 401K.
Lastly, there is the mega back door, where you contribute via 401(a) after tax to the 401k, but then convert to Roth IRA. Not automatic so it requires a phone call to our financial institute to make the conversion happen.
02-11-2020, 04:22 PM
#666
Occasional box hauler
Joined APC: Jan 2018
Posts: 1,804
There are income limits for contributing directly to a Roth IRA, but one can contribute to a traditional IRA and then “back door” convert to a Roth IRA.
Delta also has an automatic in plan conversion where we contribute to 401k using 401(a) after tax money and then it automatically converts in plan to our Roth 401K.
Lastly, there is the mega back door, where you contribute via 401(a) after tax to the 401k, but then convert to Roth IRA. Not automatic so it requires a phone call to our financial institute to make the conversion happen.
Delta also has an automatic in plan conversion where we contribute to 401k using 401(a) after tax money and then it automatically converts in plan to our Roth 401K.
Lastly, there is the mega back door, where you contribute via 401(a) after tax to the 401k, but then convert to Roth IRA. Not automatic so it requires a phone call to our financial institute to make the conversion happen.
02-12-2020, 05:52 AM
#667
Gets Weekends Off
Joined APC: Aug 2005
Posts: 324
Referencing the posted code section om contribution allocation limits. 2020 Employee lpre tax contribution limit is $19.5k. If over age 50 additional $6500 pre tax.
The remaining $37K can be filled with pre tax employer contributions or after tax employee contributions or some combination of both to fill to the annual limit for 2020 of $63,500.
The remaining $37K can be filled with pre tax employer contributions or after tax employee contributions or some combination of both to fill to the annual limit for 2020 of $63,500.
02-12-2020, 06:35 AM
#668
Gets Weekends Off
Joined APC: Jun 2018
Position: 757 CA
Posts: 616
I haven’t read anything that limits the employer amount with the exception of the $285k limit and $57k 415c limit. At SWA 285k will get you 42,750 in the 401k pot. The other 14250 is up to you (under 50). There is the option to get the rest in cash or excess fund at our place. Not sure where the $37k you speak of comes from. Sometimes things are lost in translation and I may not understand what is trying to be said.
2019 Total Limit (All Combinations): $56,000
2019 Personal Limit (PreTax/Roth): $19,000
$56,000-$19,000 = The in between: $37,000
The in between can be Company DC (up to that limit per your CBA DC x the max $280k), Profit Sharing, and After Tax.
Compensation and contribution limits are subject to annual cost-of-living adjustments. The annual limits are:
- salary deferrals - $19,500 in 2020 ($19,000 in 2019), plus $6,500 in 2020 ($6,000 in 2015 - 2019) if the employee is age 50 or older (IRC Sections 402(g) and 414(v))
- annual compensation - $285,000 in 2020, $280,000 in 2019 (IRC Section 401(a)(17))
- total employee and employer contributions (including forfeitures) - the lesser of 100% of an employee’s compensation or $57,000 for 2020 ($56,000 for 2019 not including "catch-up" elective deferrals of $6,500 in 2020 ($6,000 in 2015 - 2019) for employees age 50 or older) (IRC section 415(c))
What Is the 415 Limit?
Named for section 415 of the Internal Revenue Code (IRC), the 415 limit reflects the maximum allowable contributions to a qualified retirement savings plan in a given year. The maximum employee contributions are dictated by section 402(g), but the overall contributions from all sources are limited by section 415. This includes employee deferrals, employer matching, and profit-sharing contributions.These types of contributions are considered to be annual additions. This means that your employer can potentially contribute much more than an individual to a 401(k), although this is not at all usual. In fact, most employer's match only up to 2-5% of employee contributions.
For example, the 415 limit for 401(k) plans for 2019 is $56,000. Of this, employees may contribute up to $19,000, according to the limits outlined in IRC section 402(g). The remaining $37,000 can be composed of employer contributions and matching or profit-sharing contributions. Anything above the 415 limit is considered overfunding of the retirement account and those monies do not enjoy the same tax-deferred benefits of qualified retirement money. If those excess funds are used incorrectly, the IRS may further impose fines and back-taxes.
https://www.investopedia.com/ask/ans...-415-limit.asp
Like I said, we're all looking through a different lens, because we have different contract provisions.
02-12-2020, 08:40 AM
#670
Gets Weekends Off
Joined APC: Jun 2018
Position: 757 CA
Posts: 616
For each guy/gal it’ll be different. Just know the formula for your airline’s CBA and find your way to $57,000 (2020 IRS Limit) or beyond if you have “Cash over Cap” or over age 50. Otherwise you’re doing yourself a disservice.
Last edited by Thrust Hold; 02-12-2020 at 08:50 AM.
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