|
You also have to consider that the company often gets tax breaks on money they put into tax advantaged plans. If the company is getting a 25% tax break it makes it easier to negotiate. The company would provide a smaller percentage if there is no tax advantage to them.
|
The following is my opinion. From what information I can gather the "optional" choice is very complicated and there is a process that has to be adhered to. My understanding is Dalpa can say it will be optional because, at this point, it hasn't been determined yet that it can't be optional.
The first step is that something has to be negotiated with regards to the proposal. Lets just assume the proposal is negotiated as is. Once this is done then both Delta and Dalpa submit this Plan to the IRS and tell the IRS what they intend to do. It is then up to the IRS to approve or reject all or part of the Plan. Since an MBCBP is legal in and of itself, the only thing that is possibly in question would be the "optional" nature of the the Plan. The above brings me to a question. Why would the IRS not agree to the Plan being optional? If they don't and it applies to everyone then that will lead to more money that is tax deferred (not a good thing in the IRS's eyes) than if the Plan were optional where the IRS could collect more taxes now and on future investments of that money. Standing by for incoming!!!:) Denny |
Originally Posted by sailingfun
(Post 2964074)
You also have to consider that the company often gets tax breaks on money they put into tax advantaged plans. If the company is getting a 25% tax break it makes it easier to negotiate. The company would provide a smaller percentage if there is no tax advantage to them.
Sent from my SM-G975U1 using Tapatalk |
Originally Posted by Denny Crane
(Post 2964090)
The following is my opinion. From what information I can gather the "optional" choice is very complicated and there is a process that has to be adhered to. My understanding is Dalpa can say it will be optional because, at this point, it hasn't been determined yet that it can't be optional.
The first step is that something has to be negotiated with regards to the proposal. Lets just assume the proposal is negotiated as is. Once this is done then both Delta and Dalpa submit this Plan to the IRS and tell the IRS what they intend to do. It is then up to the IRS to approve or reject all or part of the Plan. Since an MBCBP is legal in and of itself, the only thing that is possibly in question would be the "optional" nature of the the Plan. The above brings me to a question. Why would the IRS not agree to the Plan being optional? If they don't and it applies to everyone then that will lead to more money that is tax deferred (not a good thing in the IRS's eyes) than if the Plan were optional where the IRS could collect more taxes now and on future investments of that money. Standing by for incoming!!!:) Denny |
Originally Posted by Denny Crane
(Post 2964090)
The following is my opinion. From what information I can gather the "optional" choice is very complicated and there is a process that has to be adhered to. My understanding is Dalpa can say it will be optional because, at this point, it hasn't been determined yet that it can't be optional.
The first step is that something has to be negotiated with regards to the proposal. Lets just assume the proposal is negotiated as is. Once this is done then both Delta and Dalpa submit this Plan to the IRS and tell the IRS what they intend to do. It is then up to the IRS to approve or reject all or part of the Plan. Since an MBCBP is legal in and of itself, the only thing that is possibly in question would be the "optional" nature of the the Plan. The above brings me to a question. Why would the IRS not agree to the Plan being optional? If they don't and it applies to everyone then that will lead to more money that is tax deferred (not a good thing in the IRS's eyes) than if the Plan were optional where the IRS could collect more taxes now and on future investments of that money. Standing by for incoming!!!:) Denny The other thing about negotiating a completely new program is that an 'Out clause' could be included. i.e. "The MBCBP shall be approved by the IRS as 'Optional', otherwise the MBCBP shall not be implemented and the current DPSP Cash language from the previous PWA shall remain unchanged and in force." (or some similar language that the lawyers would write) |
Originally Posted by Big E 757
(Post 2964092)
Good info Denny. With 16 years left, I’m starting to think this MBCBP might be better for me, if the DC contribution goes up.
Denny |
Originally Posted by bugman61
(Post 2964072)
Can you share your numbers? With your tax bracket and growth assumptions I don’t see how the break even point is so far away.
Sent from my iPad using Tapatalk |
Originally Posted by Denny Crane
(Post 2964112)
What a lot of younger pilots are bringing up is 5% return on a MBCBP and it is a valid concern. What they aren't adding in is the saving on the tax deferral nature of the Plan. I would submit that this savings should be included on top of that 5%. I have no idea what that amount would be.
Denny It is tax deferral not tax avoidance. An investor's focus should always be on total return. A lot of investors have lost significant wealth focusing on tax deferral vs capital appreciation/total return. IMO the MBCBP is an inefficient use of Capital. Sent from my SM-G975U1 using Tapatalk |
Originally Posted by Trip7
(Post 2964119)
What several of us have tried to stress is that savings is small enough that it is not remotely worth the 5% target return that is outside of your control. The only real savings is if your withdrawals are taxed in a lower income bracket.
It is tax deferral not tax avoidance. An investor's focus should always be on total return. A lot of investors have lost significant wealth focusing on tax deferral vs capital appreciation/total return. IMO the MBCBP is an inefficient use of Capital. Sent from my SM-G975U1 using Tapatalk Pretty sure anyone who retires in the next 5 to 10 years will be in that lower tax bracket. And that's a boatload of pilots... |
Originally Posted by Tailhookah
(Post 2964014)
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. |
| All times are GMT -8. The time now is 03:50 PM. |
Website Copyright © 2026 MH Sub I, LLC dba Internet Brands