Proposed UPS signing bonus
 

Capt: $60,000
FO/PFE: $40,000
SO (not on probation on date of ratification): $34,000
SO (on probation): retro payment, based on difference between old and new rates

Per Diem and Override Pay
 

Per Diem:

$2.00/hr domestic
$2.50/hr international
$3.00/hr Europe and Pacific Rim

Each January these rates will be recalculated using published CPI and US Dept of State rates.

Int'l Override: (no changes)

$6.50/hr Capt
$4.50/hr FO
$4.50/hr SO

Vacation
 

Vacation:

Year of longevity:days earned
1-4: 14 days
5-10: 21 days
11-19: 28 days
20+: 35 days

A signing bonus. . . how does that work?

If the contract gets ratified, then within 45 days, you get half of either 60, 40 or 34K. Then next March, you get the other half. This is the so called retro pay. This may, in my opinion, be a major reason why the TA fails. Many guys are owed thousands more in back pay.

I've been asked many times recently what the difference is between Retro Pay and a "Signing Bonus." I have explained that Retro Pay is computed on the earnings that you have accrued since the amendable date of the contract, whereas a signig bonus is simply a lump sum, the value of which is determined by some more arbitrary method. In other words, Retroactive Pay might be 3% of your Net PAY for the past 4 years, while a Signing Bonus might look like $65,000 if you're a Captain, $40,000 if you're an FO. Simple, and tempting. Add to that an option to pay some of the bonus now, and some at a later date, and the value gets more complicated to assess.


I feel fairly confident that the above is fairly accurate. If I have missed an important aspect of the comparison/contrast, please correct me.


Here's my question: How does Retro Pay affect one's tax liability in contrast to a Signing Bonus?

Let's say I earned $80,000 in the first 2 years after the contract was amendable, and $100,000 in the next 2 years. If I receive Retroactive Pay that reflects a 5% raise, I would be entitled to $4,000 for each of the first 2 years, and $5,000 for each of the next two, for a total of $18,000. How would the IRS treat that? Could I amend my tax returns for these forur years to reflect the small increments in income for each, or would I have to claim the entire $18,000 as income in the current year?

I feel certain that a signing bonus would be treated as income in the present year, and tax would be withheld at the highest rate. Is the same true for Retro Pay, or cannot a tax advantage be gained by spreading it out over the previous years?



Anybody know the answers? Know somebody who knows the answers?






.

I don't work for UPS, but we have done this signing bonus thing several times, and I think the IRS will regard a signing bonus, or retro pay, both as taxable income in the tax year you receive them.

That's right, the IRS couldn't care less what you call it. It's taxed the same.

signing bonus versus retro pay
 

Tony C...

I believe you are correct...the major difference between the signing bonus and the retro pay is how it is treated by ex spouses...I'm sure purple has the same group that has gone thru a wife or two.

In the case of a signing bonus, it is money paid to you now, not for flying or services in the past, so exes have no claim to it. Retro, on the other hand, although payable now is liable to having a part claimed by an ex if it covers a period of time they were married.

JMO

Pilot7576

Okay, I see. Thanks