Originally Posted by
notEnuf
Everything we get monetarily is company funded. This is just a single tax exemption strategy. If it’s optional and useful for those close to retirement I don’t see anything wrong with it but it has to be a 0 in both ledgers of the terms sheet. This literally costs both sides nothing. As always though the details of the plan rules matter.
Because it's a Qualified Plan, it would not be optional. The thing is it's not as advantageous to older pilots as it is to younger pilots because of the time value of money. I had to leave but the last thing they were talking about was money in retirement for younger guys. Assuming an annual raise of 3% and IRS limitations on DC contributions changing on the scale they have for the last few years, a pilot with 25/30 years to go (I forgot the exact years) will be able to save and FAE of 30% in the 401K alone. If you throw this Market Based Cash Balance Plan in the mix, over the same career it adds another 30+ percent to that FAE for a total of 60+ percent.
For the older guy without that time frame, yes, it saves money but obviously not anywhere near as much.
Denny