Road to the TA 20-02
 

The MEC is pushing the 5% return of the MBCBP and in their latest update used it to estimate 16% DC retirement, which amounts to around 30-40% FAE. IMO, a 5% return over a long career is a very poor return that yields essentially 0% after inflation. A conservative 60/40 portfolio has averages 9% since 1928 and 6% after inflation. Wanted to see what others thought about the latest update.https://uploads.tapatalk-cdn.com/202...484b581012.jpg

Sent from my SM-G975U1 using Tapatalk

I'd rather them take an ultra conservative return vs the 18+% the companies used in our old DB plans. If the returns are better than 5%, it's just gravy.

Gravy that goes on someone else's potatoes... My money, my name, my account, my control. I don't want my retirement dollars confiscated and hamstrung with a 5% return, where the fund manager keeps my gravy.

Upon proofreading, the over usage of the word "my" sounds a bit selfish, but I don't care, it is MY retirement.

Then Opt out. Not sure what part on OPTIONAL people are not getting. Now if it turns out it is not optional the vote no. I don't know why we are trying to make this a hard game. My $.02

They are selling it as optional, but at the moment it would be mandatory for all, unless the optional part is approved by the IRS. But they havent asked the IRS that question yet...

That's my biggest beef. I can say paying income taxes is optional, but then you'd have to come visit me in prison.

Sent from my SM-G965U1 using Tapatalk

Yaaa....about that optional. Might want to read the fine print on "optional."

The first roadshow they said a drawback is that the MBCBP would NOT be optional. All in or all out due to IRS rules. Now they’re saying it’s optional but not explaining what’s changed to make it so.

So basically a lot of us think they’re full of it, and want to get it passed then say “whoops! We can’t make it optional. Guess you’re in after all.”

MBCBP .....No

MBCBP with plus you...DEFINITELY NO!

You’ve got to pay taxes on it sometime, just give it to me and let me worry about it. It’s kind of like the year I was doing taxes and discovered I couldn’t contribute to a Roth IRA anymore. Called my financial guy to complain, his response, ‘yeah that’s a tough problem to have making too much money.....’

Ideas so good that they don’t need to be explained in detail with an honest reading of real (or potential) pitfalls.

IRS says mandatory
DALPA says optional

I'm placing my bets on the IRS. If the IRS says it's optional I'll reconsider my stance.

I am inclined to draw the same conclusion.

There is nothing “optional” about it unless they’re talking about the option of voting no to opt out. If you are in doubt about this in any way ask your reps to explain the process for opting out.

If it was optional we would all be discussing how to opt IN. DYODD

“Optional” like the VEBA was going to be “voluntary.” Only it wasn’t.

no thanks...

No way in hell, thanks, please. ;)

Didn't know Bernie Madoff was negotiating for us.

This one topic: the MBCBP, is why I’ve asked my LEC reps about details of what was actually proposed to the company. I support the four pillars for contract improvements, but I don’t want something like this, on which they won’t openly discuss the cost, nor will they discuss why it hasn’t been specifically polled amongst the pilot group (“we polled on retirement issues”) holding the rest of the contract negotiations hostage. I’m not happy with the reported behavior of the company either: no openers on some of the most substantial sections, no counters to our openers in those sections, and a big say vs do gap, ie “we ran too lean this last summer and we won’t do that again” vs pace of onboarding looks a lot like preparation for an instant replay of staffing levels of last summer (with the possibility that some within the company think they’ll have things better balanced between categories, so it’ll be OK).

The pilot group writ large is being treated like mushrooms, kept in the dark and fed a lot of . . . You get the idea.

So, a question to all of you that don't like the MBCBP (I'm still undecided, and will likely remain so until something concrete comes out). Clearly the 401k isn't adequate, so what is your proposal? What other company-sponsered options exist that allow us to shelter our retirement contributions from taxes now that you would find acceptable?

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...

I see more assumptions than numbers here. Especially the 6% annuity purchased with MBCBP

Sent from my SM-G975U1 using Tapatalk

Tax sheltered money. That’s upfront a savings of roughly 15-25%. Plus 4-8% return. Later when your income is much less you’d be in a lower tax bracket. If you can beat that long term please call the Oracle of Omaha. He will give you the keys to the castle.

And this plan will be in place aszis for 5-10 contract cycles?

I'm not sure I've heard anyone with two decades left in this industry advocate for the MBCBP. If I had 3-5 years left, I'd be singing the praises for sure!

I’ve talked to my reps. And any question beyond what is covered in the bullet points they put out gets a “you should ask the R&I guys that question.”

So your theory is that the socialists will take over, and mess up the 401k plan that is used by nearly everyone who has money to save for retirement but leave the MBCBP alone that is only used by the ultra rich?

I have said before and still believe that the MBCBP is a god option, and it might be the best option for some of us. But it’s not for everyone. If we actually believed that it truly will be optional in a TA you wouldn’t see all the pushback.


Sent from my iPad using Tapatalk

The upfront savings is not 15-25%. You will pay taxes on that money eventually. The only real savings is if you are in a lower tax bracket after retirement. That savings pales in comparison to to loss of investment gains being hamstrung by a 5% target return vehicle that is out of your control.

Sent from my SM-G975U1 using Tapatalk

Lot of speculation and emotion in that line. But I'm still listening.

In addition to what Trip7 said, if you don’t shelter the money now, you will only pay long term capital gains rates on withdrawals above your basis when you retire. And that almost certainly is far lower than your marginal income tax rate in retirement.


Sent from my iPad using Tapatalk

Any retirement calculation requires a lot of assumptions to come up with a single number. Not least of which is what return you can get on your own investments. Or what kind of interest we would negotiate into the MBCBP. If it makes you feel better, I can edit that post and remove all the assumptions I used. It wouldn't change the result.

I'm not advocating for or against. That's just what the math says, making educated assumptions and controlling for as many forseeable contingencies as I can.

I also am not one who generally uses the phrase "What's in it for me????". My retirement isn't mutually exclusive of someone else's security. Even if nothing changes and we operate under the current contract for the remainder of my career, I'll be able to comfortably retire in my early 50's. Anything on top of that, whether MBCBP or just an increase in rate, is gravy. I won't vote for any reduction, but I'll gladly give a couple percentage points improvement (say, 22% instead of 24%) if it means 7000 guys who gave up their pensions get to be secure in their retirement.

You sure about that? Thanks for your sound financial advice, but I’ll take the money and invest it myself as I see fit......and I’ll beat a paltry 5% return, taxes or not.

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