Originally Posted by
Denny Crane
Well, to play devils advocate, one reason could be to avoid paying up to 35% on the money going in and more than likely withdrawing it in a lower tax bracket. The opener also had an ask that would there be a minimum balance in it when one retires so the company might have to add more to it to reach that minimum.
Denny
Denny,
Ive heard this point of advocacy. In order to pay 35% on the incremental income from excess 401 cash one would have to realize an agi of about $500K on their return. Given the new tax law tables.
Are there pilots in this situation? Sure, a few. Maybe more if we look at joint income returns. But if one finds themselves in such a situation I would argue to rejoice in such good fortune and enjoy life.
I would not rationalize finding oneself in the 1% of the income strata as legitimate grounds to once again turn any part of ones income over to the corporation to be managed in your best interest.
There is no 'sure thing'. The proposed plan is no exception. What the plan does do is provide the corporation with economic incentives to support such a conversion of excess 401 cash.
Keep in mind, the CEO making the promise today to pay you, is NOT the CEO who is going to sign the check you are supposed to get in 30 years. So what does he care if you get it or not?
What he DOES care about is having to cut that check every month to pilots who manage to exceed the 401 limits. He cares about how that excess is paid as payroll income, and influences things like LTD costs, and the corporate tax return. THOSE are the things he cares about. Weather you get a payout 30 years down the road? It doesn't even enter his mind.
And recall the benevolent CEO we have today is in fact the individual who is quoted when times got hard, only lost sleep over not taking enough from this pilot group.
Nobody, and I mean nobody I have interacted with has expressed a desire for this program. Which tends to make one question what was the origin of this proposal?
At best, I would attribute it to galactic incompetence.