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09-12-2018, 05:52 AM

#11

Peoloto

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Joined APC: Sep 2015

Posts: 631

Quote:

Originally Posted by notEnuf

Everything we get monetarily is company funded. This is just a single tax exemption strategy. If it’s optional and useful for those close to retirement I don’t see anything wrong with it but it has to be a 0 in both ledgers of the terms sheet. This literally costs both sides nothing. As always though the details of the plan rules matter.

Short term it costs you your DPSP cash. Keyword your, so it is self funded.

09-12-2018, 05:57 AM

#12

notEnuf

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Position: stake holder ir.delta.com

Posts: 10,031

Quote:

Originally Posted by tunes

He already said they said at the brief it wasn't optional...

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Skimmed too fast, sorry.

Then NO. This is VEBA all over again. I wasn’t able to attend but this sounds too familiar.

09-12-2018, 07:42 AM

#13

JamesBond

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Position: A350 Both

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Thanks Denny.

09-12-2018, 07:42 AM

#14

Trip7

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Posts: 5,414

Cons: Not voluntary and Not self directable

Targeted 5% return? After inflation thats a 2% return. That’s not wealth building.

I’ll rather pay the taxes and allocate the money as I see fit.

Absolute No

09-12-2018, 07:43 AM

#15

TurbineDriver

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Posts: 454

5% return!? Wow. That’s terrible. Absolute NO vote from me.

09-12-2018, 07:44 AM

#16

JamesBond

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Position: A350 Both

Posts: 7,292

Quote:

Originally Posted by notEnuf

Skimmed too fast, sorry.

Then NO. This is VEBA all over again. I wasn’t able to attend but this sounds too familiar.

I recently flew with a guy that works in R&I and he said that the problem with the VEBA was that it was poorly packaged when proposed. He also said he believed it was a very good way to shelter/protect your money. Now I know you already have your mind made up about it, and that it is the worst thing since Saddam Hussein, but he made a very convincing argument and he is a very apolitical person. tifwiw.

09-12-2018, 07:57 AM

#17

m3113n1a1

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Joined APC: Apr 2018

Posts: 2,987

Thanks Denny, good information!!

Everyone's situation is different obviously so no solution is going to work perfectly for everyone. The reasons why I don't like the plan you described:

I plan on being in the same or higher tax bracket in retirement as I am now, so I'd rather pay the taxes now and put as much money in Roth type accounts.

I plan on having a greater than 5% return per year on average throughout my investing timeline to retirement.

I'm always weary of someone else managing my money and the fees associated with that. Even a 1% management fee is hugely significant over the long term.

But this type of plan might work for some if it's volutary. Otherwise I don't think I could vote for it. Just gimme more cash!!

09-12-2018, 08:04 AM

#18

PilotJ3

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Posts: 3,203

If is not voluntary, I don’t want it. There are other ways to make money tax free.

09-12-2018, 08:18 AM

#19

Denny Crane

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Thread Starter

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Position: Kickin’ Back

Posts: 6,971

Quote:

Originally Posted by tunes

Denny, while I agree that it could be a benefit...at the end of the day it's still your money that's contributing right? It's not company money. It's nice in the aspect of it forces you to "save" and saves on some taxes and dues but it's still your money just going from one hand to the other. I'd much rather see something company funded.

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Yes, it is your excess DC funds going into a qualified plan.

There are two ways to look at how it gets funded. We could negotiate to fund this type of plan by a separate company contribution. I don't think that is the way to do it. The backdoor way to fund this program is thru an increased DC contribution above 16%. This works for both younger/newer and older pilots.

For our retirement funding, the first thing that needs to be fully funded is the 401k. Right now well over 9000 pilots reach that goal and get DPSP CSH. The goal is to get everyone to fill that up and more. If you have a plan like this, an increase in DC helps EVERY pilot save more for retirement.

Denny