Currently there is no other option, so tax me and I'll do with it as I please.

 

Top Hat is one that comes to mind

https://www.investopedia.com/terms/t/top-hat-plan.asp

Senior pilots can defer their pay until after retirement. Taxed less due to lower income bracket.

Sent from my SM-G975U1 using Tapatalk

 

I did reach out to the NC and asked about the cost of the MBCPB. I was told is does NOT comprise the bulk of the C2019 total ask and while it does have a cost, it does sunset off the company books eventually.

I was also told the NC is well aware that we want QOL improvement and those QOL improvments will remain well after the min balaance goes away.

Lastly the NC highlighted the fact that the MBCBP and the Minimum Balance are two very separate items which in no way require one or the other. They think the confusion lies in that the most tax efficient place to put a minimum balance would be in a MBCBP, but in no way does the Min Balance require a MBCBP and a MBCBP does not at all require a Min Balance. Two separate topics.

 

From the article “ However, contributions to top hat plans such as non-governmental 457(b) plans are immediately taxable.” That sounds to me like you are taxed on it when it goes into the plan.

Denny

 

Depending on your age and previous savings I would not agree that the 401k isn't adequate, but that is a larger discussion.

The problem with the MBCBP is that you have no individual control. You are lumped into a group plan with a conservative target growth. And on top of that there surely will be high fees to the administrator who probably will select expensive funds. Additionally, the plan is not optional. It's a defined benefit plan which is mandatory until the IRS says otherwise. We are supposed to trust that this will happen. Just wait until the details are out, it will be fine!

There really aren't other long term tax deferred options, and that is fine. You have to pay taxes on income at some point, your goal should be to even out your exposure. If you need more retirement savings after maxing you 401k, you're better off with a taxable investment account or real estate. The extremely wealthy in this country do exactly that, they invest in real estate/businesses/securities and pay capital gains taxes which relatively speaking are cheap.

Just give me my money. Then I can invest it where I want based on my risk tolerance and short/long term needs.

 

I would recommend you talk to your reps. We need more than just a higher DC percentage. It’s because we make a lot. So the MBCBP allows us high earners to have a secondary tax haven to protect our money. There are rules and the MBCBP is that vehicle. It’s naive to read where some of you say you want the money and you’ll do what you want. That’s fiscally irresponsible and ignorant. You’ll not be able to outpace the taxes and return that the MBCBP will provide.

And the way this this country is going, I expect our 401k max contributions will someday soon be lowered to something around 40k from the current 58k due to our esteemed Reps in the DC swamp thinking we make too much and they enact a tax on the rich. That’s us. That hidden tax will lower our tax savings under current 401k rules. Most of America won’t care because they don’t get close to their limits.

When that hat happens our MBCBP will absorb our money above the new lower limit and protect us from our own swamp rats that are trying to hose us in DC.

The MBCBP is a great vehicle for those who are smart and get it.

 

Please show your Math on how you think pilots will not be able to outpace the after tax returns of the MBCBP

Sent from my SM-G975U1 using Tapatalk

 

There aren’t other plans that will work for our group. The MBCBP is in addition to the 401k. It’s used by corporate America’s executive class and is a great tax haven for contributions above the 401k limits. Those limits will most likely change for the worse as liberal America will expect us rich Americans to pay for their fiscal irresponsibility with the blessing of ignorant and irresponsible America.

Wake up Deltoids. This is a good vehicle. It’s not the same as the 401k and has limits. The taxes saved and sheltered until retirement with a conservative return will far outpace what any of us would be able to do without massive luck.

Anyone can can make money in the market now. It’s when this run up ends is when all you “Warren Buffets” out there will get your lunch handed to you.

Be smart. If you don’t believe me, engage a rep who’s versed on this. Most of you need to do that and from what I’ve read most are wrong and don’t understand the limits we are under. The potential tax hike with the 401k limits dropping we face. And the beauty of the high earner MBCBP will be for us.

Im just Joe. The line pilot. But I’ve done my due diligence. Some of you need to put down the crack pipe and research this smartly.

 

Ok, so I've been going through the numbers. Of course I have to make a lot of assumptions:

• No state tax, 24% tax bracket during your career, 22% in retirement, 15% capital gains tax rate
• 5% interest in the MBCBP, 8% return on your own investments
• Buy an annuity with the MBCBP total, returned at 6% per year
• Distributions on your own investments at 4%

With those assumptions and more, it will take 28 years for your own investments to provide more income than the MBCBP. At a 9% return, 22 years. Those numbers stretch are 31 and 24 years respectively with a 5% state income tax.

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.

I guess I shouldn't say "adequate". Fully tax advantaged, maybe.

 

Wow, those are some pretty arrogant comments. I have no doubt people who said the pension would always be there and that you didnt need it in your own name, were all pretty confident they were right as well...