Hillbilly

It wasn't optional a little over 6 months ago when they did the R&I roadshows. Go to the MEC website and sign in. Under Committees, select Retirement & Insurance. Under Recent Publications, select Retirement Enhancement Roadshow dated 09/18/2018. It's the Powerpoint presentation they used. Go to slide 39. The "No" under the optional column is pretty cut and dry to me.

This is just my initial opinion, but I think if there had been some revelation where they found a way for a MBCBP to be optional, they would have put that out and communicated it proudly and loudly from the top of the mountain. My gut is that they got a lot of feedback from the roadshows and the surveys that made it clear that a non-optional plan might not be well received by a vocal portion of the group. You couple that with the MBCBP plan (with some sort of minimum guarantee via upfront company cash infusion) as the only remote option of making a deadzoner (another separate vocal portion of the group) whole and they went with appeasing the masses by inserting the word optional with the MBCBP in the opener. Time will tell. You can open with whatever you want (ponies, unicorns, etc). It's what you close with that matters.

BobZ

It is difficult for me to believe this snake oil is once again being hawked as a good idea.

Yet another deferred compensation promise, to be honored by some future unknown management team.

But no worries......Im sure its also backed by the PBGC.

Hillbilly

It would be backed by the PBGC. The roadshow video at about 01:01:30 has a guy explain that this type of plan would require premiums to be paid to the PBGC. They also indicate that since it would always be fully funded, it really couldn’t become eligible for termination. I had a hard time reconciling those two things as they seem to be contradictory to me. If it’s so safe, then why does the plan have to pay premiums to the PBGC?

BobZ

you ask a good question.

Here is the basic reality. You earn the money. You hand it over to the corporation. Your money gets mixed into a comingled trust. You put your complete and blind faith in this management team and every other future management team over your career to not screw you.....

And if they do end up screwing you.....im sure the PBGC will have plenty of money to pay you off at full promised value.

Sure they will.

Oh, did they mention its likely the corporation is gonna reap very attractive tax advantages by talking you into handing over your hard earned money?

Anybody who cant see whats going on here just simply isn't paying attention. Maybe while we are at it we can work in monetizing our PS too......

m3113n1a1

I'm with you 100%. Who would think this is a good idea?? Are people really that afraid to invest their own money in their own names?

Denny Crane

Well, to play devils advocate, one reason could be to avoid paying up to 35% on the money going in and more than likely withdrawing it in a lower tax bracket. The opener also had an ask that would there be a minimum balance in it when one retires so the company might have to add more to it to reach that minimum.

Denny

PilotJ3

Realistically, if the company plays ball with something other than DC...big if.

They will either make it mandatory for everyone with the “min balance at retirement” or optional without balance at retirement. You can’t have an optional plan with a min balance.

They will need that DSPS cash from everybody to fund it properly.

Of course, is just my opinion. We will see when a Ta is reached.

Vincent Chase

As a great mind once said...

BobZ

Denny,

Ive heard this point of advocacy. In order to pay 35% on the incremental income from excess 401 cash one would have to realize an agi of about $500K on their return. Given the new tax law tables.

Are there pilots in this situation? Sure, a few. Maybe more if we look at joint income returns. But if one finds themselves in such a situation I would argue to rejoice in such good fortune and enjoy life.

I would not rationalize finding oneself in the 1% of the income strata as legitimate grounds to once again turn any part of ones income over to the corporation to be managed in your best interest.

There is no 'sure thing'. The proposed plan is no exception. What the plan does do is provide the corporation with economic incentives to support such a conversion of excess 401 cash.

Keep in mind, the CEO making the promise today to pay you, is NOT the CEO who is going to sign the check you are supposed to get in 30 years. So what does he care if you get it or not?

What he DOES care about is having to cut that check every month to pilots who manage to exceed the 401 limits. He cares about how that excess is paid as payroll income, and influences things like LTD costs, and the corporate tax return. THOSE are the things he cares about. Weather you get a payout 30 years down the road? It doesn't even enter his mind.

And recall the benevolent CEO we have today is in fact the individual who is quoted when times got hard, only lost sleep over not taking enough from this pilot group.

Nobody, and I mean nobody I have interacted with has expressed a desire for this program. Which tends to make one question what was the origin of this proposal?

At best, I would attribute it to galactic incompetence.

CX500T

Lost one pension in a bankruptcy. (Not Airline)

Not playing this again. With 24 years until retirement that's a LONG time for something to happen.