The below examples are pure speculation, just like 95% of the content on this board. The option for in service withdrawals could make it useful for the 55+ crowd looking to defer income for a few years. Here are a few scenarios where this plays out well. Notice none of the examples feature pilots under 55.
1. A pilot stuffs $$ into the plan from 55-60, then begins in service withdrawals while coasting in the left seat for the last 5 years.
2. A 58 year old pilot with an outside business opts in to the plan for the income deferral, then makes a big in service withdrawal in a "loss year" for the business.
3. A 57 year old pilot married to a high earner opts in, only to begin in service withdrawals three years later when the spouse retires.
4. Every 58 1/2 year old pilot figures out they can put the money in, then take it out next year without paying ALPA dues.
We owe an apology to new hires for not working harder on an exemption. The good news is DC excess isn't likely to hit a majority of new hires until they have been on property for 5 years or more. Another side effect of the plan is that it makes front loading less appealing due to the trapped overage for those who opt in.
My decision will depend on the details of in service withdrawals at 59 1/2. I'm considering opting in for a mix of the above scenarios. A little adjustment to the overall portfolio could make room for the 60/40 fund. Did I read correctly that those who opt in don't get DC excess confiscated until October? At least there is a break for those who front loaded 401a dollars. Another bright spot is the recent addition of in plan Roth conversion as a way to reduce self inflicted DC excess.