I posted this in the other thread in reply to something. However I would like to add it here so our union reps can see and consider it since the other is “closed” per se.
Are you saying the employer match is IRS limited to $19,500? If so, I certainly agree that we would want our contract to get to the point where we are matched to the IRS limit.
However, with or without the additional match we are still leaving a lot of money on the table unable to be deposited into tax friendly investments (even if we got $19,500 match). We are considered “high income” (bs) so we are not allowed to contribute to a traditional, or Roth IRA. Yet there is a way to do so: it’s called a back door IRA. There is more than one way to do it. One involves a 401k and is the way to get the most $ into the Roth.
Here is the IRS limit on 401k contributions.
https://www.irs.gov/retirement-plans...ibution-limits
Employee contribution $18,500.
Catch up if over 50 $6000.
Kalitta contract employer match limit of $10,000.
This is a total of $28,500, ($34,500 if over 50) yearly tax exempt limit for Kalitta employees.
The total IRS contribution limit is $55,000. $61,000 if over 50. (6k catch up not included in total limit.
There is a difference of $26,500.
This is a large amount that we are prevented from getting into tax friendly accounts.
Our Fidelity plan documents do not allow after tax contributions, or in service distributions. I called and asked. They said it is possible, but would be something that the company would need to initiate the request for. There may or may not be a cost involved.
I would appreciate it if our union representatives would request the company to change our plan documents to allow after tax contributions and in service distributions. I believe this may be a no cost, or at least low cost item.
This would allow us to put in up to the total 55k, or 61k respectively and roll the amount we put in over $35,500 (yes we would owe taxes on this “extra” amount) up to the 55k (or 61k) limit into a Roth IRA. We would then see it compound and be able to withdraw it tax free.
(Insert discussion of whether politicians will change the laws pertaining to tax free Roth withdrawals in the future here)