Thread: American, APA near final deal, reorg?
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Old 11-06-2012 | 10:55 AM
  #16  
sailingfun
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Originally Posted by ForeverFO
Some encouraging words here, and AA guys appreciate the notes of support that so many pilots have posted here, on other forums, and face-to-face.

I am embarrassed to say I don't know how 401K matching works. For 20 years now, I've had the A and B funds, and I've been maxing out my own personal 401K.

If a company contributes to a 401K, and such contributions take it over the pre-tax maximum, is the remainder taxed, but then accrues tax-free within the 401K? In other words, let's say I'm already contributing $22,500 (I'm over 50) in 2012, where would a company 14% come in? 14% of a $100,000 FO pay is $14K. Does this mean I have to reduce my own personal contribution so that the TOTAL remains below $22.5K?

Scope - I agree that once given away, it''s gone forever. I am afraid that the very senior (as in elderly) bulk of the APA is going to think "I'm all set seniority wise... this will screw new hires and junior captains, but not me, so I don't really care that much."

The 401K will work within two limits. You will still have your 22.5K limit on personal contributions. The company contributions will fall under the 415C limit. That is currently 50K. The 415C limit includes your 401k Contributions. As a example you contribute 22.5K to your 401k. Your earnings are 200,000 that year so the company contributes 28K. The total is 50.5K. You will exceed the 415C limit by 500 dollars. At Delta that 500 dollar amount would be paid as taxed ordinary income. I am not 100 percent sure if the 5K over 50 Catchup is included in the 50K 415C limit but believe so. The key point is that the combined company and personal contributions can't exceed the 415C limit and be tax deferred. Hope this helps.
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