Originally Posted by
asiabased
This is the way and LCA explained it to me over beverages. I still have the napkin.
Congress sets several limits and there is one negotiable limit that we can control. I will use 2013 as an example.
Congress sets a limit for the maximum contribution of all of our plans. That limit for 2013 is $51,000 ($56,500 if you are over 50 and participating in the 401K catchup).
Congress sets a limit on 401K contributions (Pilot Savings Plan). That limit for 2013 is $17,500. If you are over 50 then you can participate in a 401K catchup which gives you an additional $5,500 for a total contribution of $23,000.
Next, and I think this is your question, Congress sets a limit for the maximum contribution to a percentage based program (Pilot Money Purchase Plan). That limit for 2013 is $255,000. We have a 7% Pilot Money Purchase Plan so the contribution limit is 7% of $255,000 which is $17,850 for 2013. The is the negotiable part. If we had a 10% Pilot Money Purchase Plan then the limit would be $25,500. Once you exceed $255,000 of income then the Pilot Money Purchase Plan is maxed out for the year.
We also have the Disability Sick Account. At the end of the year the company adds your left over sick bank to your Disability Sick Account. If your Disability Sick Account exceeds 686 then FedEx takes the difference, multiplies it times your hourly rate and adds that to your retirement. This occurs in January.
Lastly, if you add your 401K contributions (Pilot Savings Plan) to your Pilot Money Purchase Plan contributions you will see that it doesn't reach the maximum contribution limit which is $51,000 ($56,500 if you are doing the catchup). The only way that I see to get the maximum amount into your retirement ($51,000 or $56,500 if doing the catchup) is to have your Disability Sick Account full. If you are healthy then that is a personal choice (i.e. you have to decide whether to use your sick account as a scheduling tool). Any amount over $51,000 ($56,500 if doing the catchup) will be returned to you in the form of a check in January.
I am no expert. This is just the way it was explained to me.
Reference the Pilot Benefit Book Page R-85. Catch-up contributions are excluded from the limit. So the $5,500 doesn"t count towards the cap. If you hit the cap by maxing out your contributions to the Pilot Retirement Savings Plan (PRSP), employer match, after tax Optional Savings Plan (OSP), Pilot Money Purchase Plan, and Sick Bank contibutions, the excess will be returned to you as ordinary income subject to Medicare, State and Federal Taxes, ALPA Dues, etc.