Here was the NC’s negotiations update on MBCBP emailed in January 2022:Market Based Cash Balance Plan (MBCBP) Update

Negotiations between ALPA and the Company are now complete on the MBCBP plan design, and the final plan document is being drafted to reflect the negotiated provisions of the plan. The MBCBP plan at Delta will be a first in the airline pilot profession, with several of our peer pilot groups now negotiating for similar plans. Some of the negotiated provisions that will be unique to the Delta pilot’s plan include:

• A “spill” funding concept, which prioritizes DC contributions going first into the 401(k) plan (up to Internal Revenue Code limits) prior to any money being deposited into the MBCBP. This “spill” concept ensures that pilots retain maximum control of their retirement money via the self-directed 401(k) plan to the greatest extent possible, even with an increase to retirement DC contributions being sought in C2019. This is a cutting-edge plan design construct that is not only unique to Delta pilots, but unique to other MBCBP plans currently in existence today.
• An investment strategy has been negotiated with a targeted asset mix that will essentially mirror the “Retirement Lifecycle Fund,” an investment option currently available in the Delta 401(k) Retirement Plan for Pilots. This allocation will target a mix of equities and fixed income instruments, and has consistently earned a rate of return which is greater than was initially expected for the Delta pilot’s MBCBP plan. While recognizing that past performance does not guarantee future returns, this strategy has returned over 8% in the past year, with annualized returns over the last three, five and 10 years of 10.36%, 8.08%, and 6.5% respectively. This negotiated investment allocation adds to the value of the MBCBP for Delta pilots, and is a significant improvement to what was originally thought possible for this plan.
• An “in-service distribution” feature was also negotiated in the plan. This will allow pilots who reach age 59 ˝ to take a distribution of all or a portion of their MBCBP balance while still in active service with Delta. Options for distribution include rolling over to an individual IRA, converting the balance into an annuity, or taking a lump sum taxable distribution.

Note: The in-service distribution option is available to pilots who are still in active service with Delta so long as their MBCBPbalance is no less than the sum total of all contributions that have been made into the plan, consistent with the IRS’s “preservation of capital” rule within the MBCBP.



Prior to the plan’s full implementation, there are two remaining hurdles that must be navigated:

1. The Company still operates four Defined Benefit (DB) plans (including the former NWA plan), and relief funding rules are still available under the Pension Protection Act of 2006 (PPA) for these plans. While these plans are now well-funded and are not utilizing this relief, under PPA the U.S. Department of Treasury may object to the establishment of a new DB plan at Delta so long as this relief funding is still available. The relief funding option expires September 30, 2023, at which time the Treasury can no longer object.
   
   ALPA and the Company jointly approached the Treasury at the beginning of 2021 to determine if they would voice an objection to our new plan. While Treasury responded in a positive manner at that time, they have not provided any formal guidance since, despite several subsequent attempts at contact. We will continue to utilize all available resources to get an answer, however without Treasury assuring that they will not oppose a new plan, implementation cannot begin so long as the funding rule relief is available to Delta. The worst-case scenario is if Treasury refuses to provide guidance before October 1, 2023, at which time the plan may then begin to operate.
   
2. Much like FAA regulations, application of the Internal Revenue Code (IRC) is often left to interpretation by subject matter experts like accountants and actuaries. In cases where a plan sponsor (such as Delta) requires clear guidance on a perceived interpretation, a “Private Letter Ruling” (PLR) process exists in which the IRS can provide a definitive answer. Despite our various subject matter experts feeling confident that our design is compliant with the IRC, the Company felt there were several elements within the Delta pilots’ MBCBP plan design which required some clarification to move forward.
   
   Among those issues was the concept that our pilots could direct ALPA to include or exclude them from the new MBCBP(“optionality”) on an individual basis. A PLR was submitted last year asking this very question, and when the IRS finally responded in December, they declined to provide guidance, essentially stating they required further information prior to issuing any ruling.
   
   We continue to work through the bureaucracy of the federal government to implement this plan as soon as is possible. Please keep in mind the following:

• In late 2020, the Delta pilots ratifiedLOA #20-04, which included an “optional” MBCBP.
• ALPA has been working to establish the plan, as advertised, ever since the ratification of LOA #20-04.
• There has not been an unfavorable interpretation regarding the “optionality” feature from the IRS.
• In the event there is an unfavorable interpretation by the IRS of our “optional” plan design, the Delta pilots would have the opportunity to decide, via membership ratification, on their support of a plan in which all pilots would be required to participate.
• While ALPA and our professional consultant subject matter experts remain confident that the IRS will permit some form of an “optionality” component, the Company is unwilling to assume the risk of implementing the plan without clear guidance from the IRS.

Retirement DC contribution increases being sought in C2019 assume that the MBCBP will be established to accommodate the increased funding. Without a new plan such as an MBCBP, further 401(k) increases will merely add to taxable income for most of our pilots. Our ability to increase Company-paid retirement benefits going forward is severely limited without the MBCBP to supplement the 401(k), especially with the potential for future political pressure which may even further limit 401(k) contributions.



While the implementation is taking longer than anticipated, the NC is confident that the MBCBPwill provide immediate enhancement to Delta pilots’ retirement as well as an outstanding vehicle with which to improve our total Company-paid retirement package. We appreciate your patience as we navigate the slow process of working with the federal government bureaucracy. Please watch for updated educational materials on the MBCBP, along with relevant Q&A over the coming weeks or months as we near implementation of the plan.
Fly Safe,



Chad, Eric, ******* and Rich