Originally Posted by
Albief15
Your B fund is only good for a percentage of a salary limit set by IRS.
For 2015 the cap is :
The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.
So...you get 7% x 265k or $18550.
You can also have 401ks, sick leave sell back, etc. However, the cap is:
The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.
So...you are limited on the salary you use to factor the B plan contribution. You are then limited on the total amount you can save tax deferred.
So...a 18% B fund on $300k would be capped at 265k x 18% or $47,700 by the salary limit.
A 25% B fund would be $53000. 265x 25%= $66,250, so in this case your contributions would stop (unless you have cash-over-cap allowance) once you hit 53k.
So isn't there really two separate/but related caps when discussing how our B fund works?
(...and a third $260K A fund cap that's in our CBA)
It appears to me that many times guys are "talking past each other" because they are actually referring to different (but related) caps
When one uses the idea of "cash over cap" I think it's important to specify which cap one is referring to
I think the main point is that with these various caps, we cannot make the general statement that an X% increase in our B fund yields and actual X% increase in retirement savings as a percentage of some pilots TOTAL earnings
As a very wise marketing manager once told me...
The BIG print giveth, and the small print taketh away
