Originally Posted by Wasatch Phantom

H R 7327 was signed into law by President Bush late last month. This was something that ALPA PAC was pushing for. Though ALPA didn't get all they wanted, they did get some very significant benefits for us.

Disclaimer: I am not a CPA or financial planner, this is only my opinion.

As I understand it, airline employees (pilots) who received a distribution from their employer as restitution for their lost defined benefit retirement plan can put that money into a Roth IRA without regard to the Roth income limitations.

Fellas (and ladies) this is a good deal. Scratch that: Great deal!

I don't know all the details, but, for example, DAL filled up each pilots 401K to the maximum allowed by law in 2007 and 2008. Any amount over that was distributed to the pilot as ordinary income, and was taxed as such. What the legislation does (as I understand it) is allow that pilot to put those funds into a Roth IRA. I think the Roth income limitations are something like $100K for single filers and $160K for married filing jointly. (Those numbers are based on adjusted gross income.)

In a Roth, the money grows (hopefully) tax free and when you take it out in retirement you do so without paying taxes on it. Additionally, conventional IRA's have minimum withdrawal rules once you reach a certain age, Roth IRA's have no such limitation.

I urge all of you to check with your tax professionals / financial advisors on how you can individually maximize this opportunity.