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Old 05-14-2019, 03:41 PM   #1  
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Default Market Based Cash Balance Plan

So what do people think of the Cash Balance Plan that ALPA is suggesting?

I don't know anything about it - here's a webpage that describes it well. I can't vouch for it's accuracy, but seems reputable:

https://www.cashbalancedesign.com/re...h-balance-101/
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Old 05-14-2019, 03:44 PM   #2  
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Originally Posted by iaflyer View Post
So what do people think of the Cash Balance Plan that ALPA is suggesting?

I don't know anything about it - here's a webpage that describes it well. I can't vouch for it's accuracy, but seems reputable:

https://www.cashbalancedesign.com/re...h-balance-101/
A horribly bad idea, for many reasons.
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Old 05-14-2019, 03:49 PM   #3  
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A horribly bad idea, for many reasons.
Well, ok. But why?

On the surface, it seems like another way to put money away and escape pay the tax now. Also, that webpage says "Like all qualified retirement plans, assets are protected from creditors." so it sounds like it's protected.
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Old 05-14-2019, 03:53 PM   #4  
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I'm all for retirement options, as long as it is implemented as optional

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Old 05-14-2019, 03:54 PM   #5  
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My first instinct is that it sounds pretty good as a way for more tax deferred retirement savings.

I am concerned about one thing.

The email talks about a "minimum balance" within the MBCBP.

What does that mean? How do you negotiate a minimum balance? Minimum at retirement? Minimum at date of signing? Do you have to retire with a certain number of years to get the minimum balance? If it is minimum at retirement then that means that someone who retires 10 days after date of signing will get that minimum balance. So you could never contribute anything and get the minimum balance? Could you make terrible investment choices and still get the minimum balance?

I think we need an explanation of the minimum balance concept. Unless I am misunderstanding, the minimum balance is fundamental to the whole concept.
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Old 05-14-2019, 04:05 PM   #6  
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I'm all for retirement options, as long as it is implemented as optional

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Absolutely. Agree 100%.
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Old 05-14-2019, 04:09 PM   #7  
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Well, ok. But why?

On the surface, it seems like another way to put money away and escape pay the tax now. Also, that webpage says "Like all qualified retirement plans, assets are protected from creditors." so it sounds like it's protected.
The concept was developed to assist older business owners who need to accelerate their savings as they probably spent their earlier years reinvesting into their business instead of saving for retirement.

The investment strategies for a small partnership, for example, would be relatively straight forward. Not so when the investment strategy should be fitting for a 25-year-old with 40 years to retirement as someone in their 60s with only a couple of years to go. Let alone, find a one size fits all model for 14,500+.

There has to be a plan administrator. Do you trust our employer or ALPA to make portfolio management decisions for you? I don't. Besides, the fees for this type of investment management are fairly high.

With this type of plan you may be "guaranteed" a certain return. Do you know where any excess goes? To the plan administrator. If the plan doesn't produce the required return, the plan administrator will have to fund the difference. With the history of the airline business, do you trust that Delta will be able (and willing) to fund your retirement account in 20 years from now?
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Old 05-14-2019, 04:19 PM   #8  
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Default Previous discussion

There was a previous thread on this topic here, started by a handsome and witty member of this body.

Questions I have after today's letter are:
1) Define voluntary. If I opt out, do I still get the 25% contribution, or am I opting out of 9% of my salary?
2) How likely is the Treasury Department to approve an optional defined benefit plan (the MBCB plans are defined benefit plans)? Have voluntary DB plans been designated as "qualifying" in the past? What hurdles exist to the approval of this plan, and what is the anticipated timeline? Can the approval timeline precede membership ratification (i.e. can we know what we are voting on)?

BoBZ--shocked you have yet to respond. I found your comments in the previous thread useful.
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Old 05-14-2019, 04:25 PM   #9  
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Being able to put away 25% tax deferred is very positive move toward restoring the equivalent of our lost DB plan.

Im sure there will be many more communications and questions answered.
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Old 05-14-2019, 04:34 PM   #10  
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What killed the old guys was the "Bridge Plan", quite a bit more money.... but it was classified as non-qualified. It disappeared faster than peanuts at happy hour during Chap. 11.
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