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Originally Posted by PilotWombat
(Post 2964331)
That's not correct. If the plan is set up with a 5% return, it pays 5%. If the actual market return is higher, the excess earning go into a reserve fund. The next time the market return is less than 5%, the reserve fund is used to fill out the 5%. If there's a string of bad luck and the reserve fund runs out, the company is required to use operating cash to fill it out. Since this process happens every year, the program is always fully funded.
Reading this again, I disagree with your last sentence. It’s not fully funded always. They acknowledged the scenario where investments could go down and it wouldn’t be funded to the target rate. Having the company cover that difference would be a separate program. There is no guarantee of 5%. |
Originally Posted by notEnuf
(Post 2964323)
I rarely get to SEA but I appreciate the offer. While we disagree on this issue I think we have common ground on the majority of the contract and its need to be a big win for the pilots to end the bankruptcy hangover. I'd like to reciprocate the offer but you have to be willing to drink your beer in a shanty (and no I didn't mean shandy) MSP has a bar every 20 feet this time of year.
https://www.exploreminnesota.com/sit.../11302/800x532 One of my really good friends owns a, how do I put this, not so upscale bar and it's a great place to hang out and have lunch/dinner and a couple beers. Denny |
Originally Posted by Denny Crane
(Post 2964223)
Well it's good you are advocating what's mine is mine and what yours is yours. That's a given and irrelevant. What is relevant is how we receive what is ours. Your opinion is different than mine. Not right or wrong just different. If, as you say, the plan is not optional (which I'd argue it has yet to be determined) then you are dictating how I receive my money just as much as I'm dictating it to you. You do not have the high ground here......we are on level footing with differing opinions.
You are also making this personal by saying it's for me for a year or two. The tax deferral is not just for a couple of years, it's for the life of the plan and affects everyone, not just me. Denny |
I think I can see why the company asked for the mediator. They probably can tell a lot of pilots would be against this.
It seems it would be better to have a medical retirement vehicle. That alone could be a massive savings in retirement but I know there is tricare for many or most so I'm sure that's a sticking point. Maybe just more money and let me figure it out. |
Originally Posted by forgot to bid
(Post 2964449)
I think I can see why the company asked for the mediator. They probably can tell a lot of pilots would be against this.
It seems it would be better to have a medical retirement vehicle. That alone could be a massive savings in retirement but I know there is tricare for many or most so I'm sure that's a sticking point. Maybe just more money and let me figure it out. |
Originally Posted by tunes
(Post 2964458)
i'm on tricare, granted reserve select, so i wouldn't get it after retirement until i hit the age, but i'm 100% for retiree healthcare here.
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Outsider question here:
Is this proposed MBCBP to be funded by cash-over-cap funds (called DPSP Cash, right?), or some other means? Thanks! |
Originally Posted by tunes
(Post 2964437)
that's the problem, no one knows for sure and R&I isn't answering the question when people ask it.
After the initial pushback, ALPA added 2 points to their comms on the MBCBP. They added the word "voluntary" in red underlined text, and added a bullet at the bottom that said "Delta and ALPA must receive approval from the US Department of treasury..." I would like to agree with Denny above that they would go to the IRS who will say "sure its optional" and everyone can be happy. Those who want it get it, those who don't aren't hamstrung by an inefficient plan. But based on their sell job to date if they have to choose between nothing or mandatory, I have no faith that they would back out. |
Well the issue with a “medical retirement” plan is just turn on the TV. Seems like there is a ever growing desire to go to a government Medicare system. Not my wishes but what happens to our money in say 10-15 years from now if that becomes a reality?
Back on topic... lots of good points made on both sides, I agree with many of you. We need to see the fine print. Details really matter in this not just a few bullet points. So far I’m leaning against this. Call me old fashioned but I still like the “tax me now and let me control my money” philosophy. For some of us it’s not just about retirement. I’m trying to fill up my kids funds, pay off the mortgage sooner, etc and while the tax on that last few $ is high, it’s mine to allocate as I wish. |
Originally Posted by forgot to bid
(Post 2964449)
It seems it would be better to have a medical retirement vehicle. That alone could be a massive savings in retirement but I know there is tricare for many or most so I'm sure that's a sticking point. Of course, since the company currently contributes zero to my healthcare, I’d love to see a company-funded Tricare supplement in C19 too... |
Originally Posted by forgot to bid
(Post 2964449)
I think I can see why the company asked for the mediator. They probably can tell a lot of pilots would be against this.
It seems it would be better to have a medical retirement vehicle. That alone could be a massive savings in retirement but I know there is tricare for many or most so I'm sure that's a sticking point. Maybe just more money and let me figure it out. IMO the MBCBP is not a viable solution for the majority of Delta pilots and should be dropped from our ask immediately. Sent from my SM-G975U1 using Tapatalk |
Originally Posted by Dorn
(Post 2964469)
Well the issue with a “medical retirement” plan is just turn on the TV. Seems like there is a ever growing desire to go to a government Medicare system. Not my wishes but what happens to our money in say 10-15 years from now if that becomes a reality?
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Originally Posted by forgot to bid
(Post 2964460)
Even nearly 25 years from retirement that's a big deal to me because I could see that draining a lot of savings.
Sent from my SM-G975U1 using Tapatalk |
Originally Posted by FangsF15
(Post 2964473)
Simple fix. Have an “out” clause if ever the Govt takes over healthcare (God help us if they do).
The medical plan we have now has the HSA fund. That is 100% tax free front and back end. That’s my money that I can use for virtually anything (in the medical sphere) which is very lose. And it’s investible so you can save up to $7100 max contribution per year. That’s easily 200k if you start and have years to go. (Or at least a very healthy chunk of cash pending on your retirement date) Plus worse case if the medical system goes public well it’s still 100% your money. Kind of hard to turn that down. |
Originally Posted by Trip7
(Post 2964482)
I like the concept of the VEBA. Now a 5% return on a VEBA I'll take because very very few investors can beat a triple tax advantaged account with a taxable one. Petitioning the IRS to allow pilots to limit the amount of DPSP Cash that goes into the VEBA would be a big win. Although the VEBA is not pensionable, I think it's a good trade-off for tax free dollars going towards the largest expense for most retirees.
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Originally Posted by Dorn
(Post 2964483)
ya I’m sure that’s could be arranged. Just making the point I am always incredibly weary of “promises” I 100% know what I intend to do with my money but large plans such as a medical retirement that becomes obsolete in some point in the future is not comforting at all. What tax rate is that money taxed at? Is it my money or some fund? What is the growth of said money for the time is sat in a fund for a future promise that is now obsolete?
The medical plan we have now has the HSA fund. That is 100% tax free front and back end. That’s my money that I can use for virtually anything (in the medical sphere) which is very lose. And it’s investible so you can save up to $7100 max contribution per year. That’s easily 200k if you start and have years to go. (Or at least a very healthy chunk of cash pending on your retirement date) Plus worse case if the medical system goes public well it’s still 100% your money. Kind of hard to turn that down. |
Originally Posted by m3113n1a1
(Post 2964265)
What are you talking about? The s&p historical return is about 10% per year on average long term.
True. I was talking about in years when the S&P is in the red. Misunderstood that I meant long term average. If if there’s a better alternative to it let’s hear about it. What I don’t understand the pushback to a plan that will essentially give us a 9% raise (in addition to a raise in pay rates) but masked in a retirement vehicle that is in addition to our 401k. While our 401k is maxed, anymore DC is fruitless, so we need something additional. While not as good as 401k rules, I’ve not seen where there is something that not only is available but what can be negotiated due to tax write offs for Delta on the MBCBP. We are are at the limits. The MBCBP May be all we have available that works for both sides and is negotiable. |
Originally Posted by Tailhookah
(Post 2964489)
HSA can’t be used if someone is on the DPMP. So it’s not available to all.
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Originally Posted by Trip7
(Post 2964472)
Agree 100%. The Union is not only spending a significant amount of negotiating capital trying to implement a retirement vehicle the majority of pilots don't want, they are using misleading communications to promote it the the pilots. They've been doing this since the initial R&I Roadshow. Even a couple posters here have used similar talking points and as most can see any pilot with basic knowledge of finance and investing can see right thru it.
IMO the MBCBP is not a viable solution for the majority of Delta pilots and should be dropped from our ask immediately. Sent from my SM-G975U1 using Tapatalk Prove it. Where have you read/seen that stated as fact? That is a complete assumption on your part. Denny |
Originally Posted by Tailhookah
(Post 2964489)
HSA can’t be used if someone is on the DPMP. So it’s not available to all.
Or tricare Sent from my iPhone using Tapatalk |
Originally Posted by Dorn
(Post 2964483)
The medical plan we have now has the HSA fund. That is 100% tax free front and back end. That’s my money that I can use for virtually anything (in the medical sphere) which is very lose. And it’s investible so you can save up to $7100 max contribution per year. That’s easily 200k if you start and have years to go. (Or at least a very healthy chunk of cash pending on your retirement date) Plus worse case if the medical system goes public well it’s still 100% your money. Kind of hard to turn that down.
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Originally Posted by PilotWombat
(Post 2964022)
Ok, so I've been going through the numbers. Of course I have to make a lot of assumptions:
So I guess if your retirement horizon is more than 30 years out, then it's in your best interest to not have the MBCBP. If it's sooner than that, the MBCCBP is the better option. -At the end of the MBCBP you gave it a 6% annuity and only 4% distributions on the self directed plan. WTF? Both avenues have an option to purchase a similar annuity in the market place, the MBCBP isnt a prerequisite for an annuity. Talk about apples and oranges. What if you did a 4% withdrawal rate from the MBCBP and purchased a 6% annuity with the self directed funds? Talk about misleading. -You have not shown any math behind the assumed final value of the two plans. In the ignorant cries to "Avoid TAXES", you are leading the uneducated masses into a plan that will handicap them with Income Taxes on retirement money. Wealthy individuals pay LT Capital Gains Taxes, not Income Taxes. -There is a better option to pay income taxes now and then pay LT Capital Gains taxes on the growth via a simple ETF. Consider the following... IVV, a plain vanilla S&P 500 EFT has a 15 year return of 8.94%. It has an After Tax return of 8.44%. "That's impossible" cry the MBCBP, fee generating, income confiscators. Nope, its real. IVV or other tax efficient ETFs generate most of their returns by Long Term Capital gains. The dividends, which represent only a small portion of the total return are taxed annually, The bulk of the return is taxed as a long term capital gain at the time of the sale. iShares Core S&P 500 ETF (IVV) Fund Tax Analysis Here is my math. $20,000 annual contributions (calculated at the beginning of the year), 5% MBCBP return, 25% Income Tax paid on distribution. $13,600 annual investment ($20,000-32% income tax), 8% after tax return in an ETF, 15% LT CG tax MBCBP Value after taxes 5 years - 87,000 10 years - 198,000 15 years - 340,000 20 years - 521,000 MMIC Plan (My Money, I Control) Value after taxes 5 years - 83,000 10 years - 201,000 15 years - 370,000 20 years - 612,000 DYODD, YMMV, Etc. And please for the sake of your financial future don't take financial advice from anonymous pilots like me who have no vested interest in your financial future. Also weigh carefully the advice of those who may have something to gain from promoting the MBCBP. |
Originally Posted by Trip7
(Post 2964482)
I like the concept of the VEBA. Now a 5% return on a VEBA I'll take because very very few investors can beat a triple tax advantaged account with a taxable one. Petitioning the IRS to allow pilots to limit the amount of DPSP Cash that goes into the VEBA would be a big win. Although VEBA funds do not pass on to your estate, I think it's a good trade-off for tax free dollars going towards the largest expense for most retirees
Sent from my SM-G975U1 using Tapatalk |
Originally Posted by Tailhookah
(Post 2964498)
True. I was talking about in years when the S&P is in the red. Misunderstood that I meant long term average.
If if there’s a better alternative to it let’s hear about it. What I don’t understand the pushback to a plan that will essentially give us a 9% raise (in addition to a raise in pay rates) but masked in a retirement vehicle that is in addition to our 401k. While our 401k is maxed, anymore DC is fruitless, so we need something additional. While not as good as 401k rules, I’ve not seen where there is something that not only is available but what can be negotiated due to tax write offs for Delta on the MBCBP. We are are at the limits. The MBCBP May be all we have available that works for both sides and is negotiable. Your premise of “we need something additional” is false. Just because we max out our 401k, doesn’t mean you need some other tax vehicle. Whole life insurance is another vehicle but most people don’t use it because it’s a terribly inefficient way of saving your money. The MBCBP is better than whole life but still has a lot of inherent drawbacks and inefficiencies. Putting money in it just because you want some other place is foolish. ALPA still has yet to put out a correct, objective analysis of the MBCBP vs after tax investments. I wonder why? |
Originally Posted by Denny Crane
(Post 2964505)
Prove it. Where have you read/seen that stated as fact? That is a complete assumption on your part.
Denny I’m not agreeing with him, but I could say the same to you. Prove that the pilots want this. ALPA did no specific polling on either the MBCBP or the min balance. None. So they don’t know if we want it or not but are charging straight ahead. There were lots of vague questions online and in phone polling about “do you want more DC or not”, or “do you want more retirement?” Of course everyone wants more retirement money. Then they published info on all the available vehicles and picked one. |
Originally Posted by Planetrain
(Post 2964530)
The medical VEBA would have been a really great plan. At about $1/flt hour input ($1000/year... $25,000 in a 25-year career), it would have been relatively low cost, but the forums killed it over the issue of its estate-ability. So strange. The tax savings aspect was huge. If I die, my wife gets it; if we both die, dependent kids get it. If all of the above die before completely exhausting the balance (these funds could be exhausted early in retirement well before tapping into HSA balances), the Delta pilot group gets the remainder. What I think is misunderstood, is that most people on their deathbed in the hospital would use up their VEBA fund. Estate-ability issues would realistically apply to very very few.
If we can get a VEBA that is solely company funded or allows the pilot complete control of how much of their funds go in it would be a big win for the pilot group. Sent from my SM-G975U1 using Tapatalk |
Originally Posted by Gunfighter
(Post 2964528)
There are so many reasons this is wrong. Thank You for once again proving pilots should not be financial advisers. Please don't take my suggestions below as advice, rather use my commentary as a basis for forming your own conclusion. Furthermore it may be a basis for a rational discussion with a real financial advisor...
-At the end of the MBCBP you gave it a 6% annuity and only 4% distributions on the self directed plan. WTF? Both avenues have an option to purchase a similar annuity in the market place, the MBCBP isnt a prerequisite for an annuity. Talk about apples and oranges. What if you did a 4% withdrawal rate from the MBCBP and purchased a 6% annuity with the self directed funds? Talk about misleading. -You have not shown any math behind the assumed final value of the two plans. In the ignorant cries to "Avoid TAXES", you are leading the uneducated masses into a plan that will handicap them with Income Taxes on retirement money. Wealthy individuals pay LT Capital Gains Taxes, not Income Taxes. -There is a better option to pay income taxes now and then pay LT Capital Gains taxes on the growth via a simple ETF. Consider the following... IVV, a plain vanilla S&P 500 EFT has a 15 year return of 8.94%. It has an After Tax return of 8.44%. "That's impossible" cry the MBCBP, fee generating, income confiscators. Nope, its real. IVV or other tax efficient ETFs generate most of their returns by Long Term Capital gains. The dividends, which represent only a small portion of the total return are taxed annually, The bulk of the return is taxed as a long term capital gain at the time of the sale. iShares Core S&P 500 ETF (IVV) Fund Tax Analysis Here is my math. $20,000 annual contributions (calculated at the beginning of the year), 5% MBCBP return, 25% Income Tax paid on distribution. $13,600 annual investment ($20,000-32% income tax), 8% after tax return in an ETF, 15% LT CG tax MBCBP Value after taxes 5 years - 87,000 10 years - 198,000 15 years - 340,000 20 years - 521,000 MMIC Plan (My Money, I Control) Value after taxes 5 years - 83,000 10 years - 201,000 15 years - 370,000 20 years - 612,000 DYODD, YMMV, Etc. And please for the sake of your financial future don't take financial advice from anonymous pilots like me who have no vested interest in your financial future. Also weigh carefully the advice of those who may have something to gain from promoting the MBCBP. Sent from my SM-G975U1 using Tapatalk |
Originally Posted by Trip7
(Post 2964545)
I agree with you for the most part. I think the biggest reason why VEBA was killed was the inability of a pilot to restrict how much DPSP Cash went into the VEBA. Also it would have killed off the viability of the Mega Backdoor Roth.
If we can get a VEBA that is solely company funded or allows the pilot complete control of how much of their funds go in it would be a big win for the pilot group. |
Originally Posted by Trip7
(Post 2964545)
I agree with you for the most part. I think the biggest reason why VEBA was killed was the inability of a pilot to restrict how much DPSP Cash went into the VEBA. Also it would have killed off the viability of the Mega Backdoor Roth.
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Originally Posted by Richard Head
(Post 2964536)
I will throw my vote in for NO. I also have several friends here who would be a firm NO as well. In fact the one person that I’ve met in the last six weeks who wanted it was so misinformed on it that I couldn’t even comprehend what he was saying. I almost wish they would put their four retirement options out there for a vote and let the results speak for themselves.
Also, I don’t really trust the union, and I trust that the MBCBP is going to be optional, even less than that. Edit: and if there’s any way that the MBCBP interferes with the 401k Excess/Excess Plus then it’s a double hard no. |
Originally Posted by Gunfighter
(Post 2964558)
The NC didn't learn from VEBA. Messing with DPSP Cash is a deal killer. IF we had confidence that MBCBP was optional AND didn't mess with DPSP Cash, it would be accepted. I'm in favor under those two conditions
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Originally Posted by bugman61
(Post 2964538)
Your premise of “we need something additional” is false. Just because we max out our 401k, doesn’t mean you need some other tax vehicle. Whole life insurance is another vehicle but most people don’t use it because it’s a terribly inefficient way of saving your money. The MBCBP is better than whole life but still has a lot of inherent drawbacks and inefficiencies. Putting money in it just because you want some other place is foolish. ALPA still has yet to put out a correct, objective analysis of the MBCBP vs after tax investments. I wonder why?
It seems that Delta gets tax breaks from this MBCBP. They do not for an increase to DC. Right? I think Alpa is working inside of tight parameters to find something that we can get the max benefit for with Delta’s agreement inside our contract that can increase our bottom line in other places not so obvious. More like a hidden raise. Thats how how I see it. We are not going to get the equivalent in pay raises and the more tax sheltered income we get at this level, the better. |
Originally Posted by FangsF15
(Post 2964473)
Simple fix. Have an “out” clause if ever the Govt takes over healthcare (God help us if they do).
So irrespective of age, Tricare status and government based variables, giving all of us health care funds to use as we need in the future seems to be a walk off home run win for all. Throw in long term care funds and it becomes a walk off grand slam. Yet instead we're out there chasing waterfalls with something no one even knows what it is yet (and may not until its TA'd) that's being sold as voluntary yet can't be unless massive variables beyond our control change, that's also being sold as guaranteed for life no matter what when it can't be, all for the privlidge of guaranteed sub par returns and high fees in the meantime. |
Originally Posted by Tailhookah
(Post 2964577)
Whole life or annuities are very, very expensive. Why do you think insurance guys love selling them? That nice house or big boat your insurance guy came from selling these products.
It seems that Delta gets tax breaks from this MBCBP. They do not for an increase to DC. Right? I think Alpa is working inside of tight parameters to find something that we can get the max benefit for with Delta’s agreement inside our contract that can increase our bottom line in other places not so obvious. More like a hidden raise. Thats how how I see it. We are not going to get the equivalent in pay raises and the more tax sheltered income we get at this level, the better. The MBCBP will also be expensive and inefficient. Why do you think PWC and Fidelity love selling them to pilot unions? The payroll tax savings to the company at that level is minimal, should just be 1.45% for Medicare. Most everything else should have been paid to the cap. So it’s not like they have this huge savings to split with us. It seems you love this plan and really want it. So maybe spend your time pressuring ALPA to actually be honest about the “optional” nature of the plan and commit to abandoning it if it’s mandatory. If they actually did that then most of us arguing against the MBCBP would back off. |
Originally Posted by bugman61
(Post 2964541)
I’m not agreeing with him, but I could say the same to you. Prove that the pilots want this.
Denny |
Originally Posted by Tailhookah
(Post 2964498)
What I don’t understand the pushback to a plan that will essentially give us a 9% raise (in addition to a raise in pay rates) but masked in a retirement vehicle that is in addition to our 401k.
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Originally Posted by Gunfighter
(Post 2964528)
There are so many reasons this is wrong. Thank You for once again proving pilots should not be financial advisers. Please don't take my suggestions below as advice, rather use my commentary as a basis for forming your own conclusion. Furthermore it may be a basis for a rational discussion with a real financial advisor.
Also, I would never take financial claims from the internet as advice. Instead, I would take the advice of my father, a "real financial advisor" (CFP), whom I have been learning from for the last 3 decades. I am in no way up to his level of knowledge, but I am generally good at math, I know how to read IRS documents, and I believe I have a better understanding of this stuff than the general population.
Originally Posted by Gunfighter
(Post 2964528)
At the end of the MBCBP you gave it a 6% annuity and only 4% distributions on the self directed plan. WTF? Both avenues have an option to purchase a similar annuity in the market place, the MBCBP isnt a prerequisite for an annuity. Talk about apples and oranges. What if you did a 4% withdrawal rate from the MBCBP and purchased a 6% annuity with the self directed funds? Talk about misleading.
Originally Posted by Gunfighter
(Post 2964528)
You have not shown any math behind the assumed final value of the two plans. In the ignorant cries to "Avoid TAXES", you are leading the uneducated masses into a plan that will handicap them with Income Taxes on retirement money. Wealthy individuals pay LT Capital Gains Taxes, not Income Taxes.
Originally Posted by Gunfighter
(Post 2964528)
There is a better option to pay income taxes now and then pay LT Capital Gains taxes on the growth via a simple ETF.
Again, I am not arguing for or against the MBCBP. I just don't buy the "it's my money or else" crock that you're trying to sell. I want to see the actual numbers. And, as it turns out, if you take the DPSP Cash money and invest it after tax and get 8% from it, it takes about 18 years to break even compared to the MBCBP and the tax savings you get right away. |
Originally Posted by bugman61
(Post 2964682)
The MBCBP will also be expensive and inefficient. Why do you think PWC and Fidelity love selling them to pilot unions?
The payroll tax savings to the company at that level is minimal, should just be 1.45% for Medicare. Most everything else should have been paid to the cap. So it’s not like they have this huge savings to split with us. It seems you love this plan and really want it. So maybe spend your time pressuring ALPA to actually be honest about the “optional” nature of the plan and commit to abandoning it if it’s mandatory. If they actually did that then most of us arguing against the MBCBP would back off. |
Originally Posted by Planetrain
(Post 2964530)
The medical VEBA would have been a really great plan. At about $1/flt hour input ($1000/year... $25,000 in a 25-year career), it would have been relatively low cost, but the forums killed it over the issue of its estate-ability. So strange. The tax savings aspect was huge. If I die, my wife gets it; if we both die, dependent kids get it. If all of the above die before completely exhausting the balance (these funds could be exhausted early in retirement well before tapping into HSA balances), the Delta pilot group gets the remainder. What I think is misunderstood, is that most people on their deathbed in the hospital would use up their VEBA fund. Estate-ability issues would realistically apply to very very few.
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Originally Posted by tunes
(Post 2964822)
if your dependent kid were over the age of 25 they would not get it and it would go back into the pool....that’s why it was an atrocious plan
Even then, who cares if this goes to your kids or not? You’re going to spend it well before they would have a crack at it if this restriction were gone. Talk to some people on Medicare. |
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