So there will be exponentially more auto-yes, or auto-no?

 

I love when the Moakies get angry. They gave away so many of our work rules over the years for industry standard wages and they think they did a good job. It is an amazing mindset.

 

I’m all ears. Where should I put $20-50k a year of taxable income to watch it grow not only 40%, but then also another 5-6%, and not just once but every year in perpetuity?

 

Real estate

 

You needed to add..."with virtually no risk". Now the calculus is much tougher for them to answer

 

Crewdawg and others have said some of this already but here is my take.

Right now you get to keep your DC overages and do whatever you want with them. You can save for retirement in any number of individual vehicles, you set it aside for your kids college expenses, you can spend it as regular income. Nobody can take it away from you. The argument in favor of the MBCBP is that it is a better retirement savings option than anything that you can do on your own. The R&I committee went to great lengths with communications saying that the MBCBP was far and away better than taking the money yourself. The initial comms were at best lacking details, and at worst intentionally misleading about the true impact of income taxes on DC overages. The MBCBP as initially proposed was like a VEBA on steroids. It took everyone's DPSP cash and put it in an account that you had no control over with a targeted 3% growth rate. It would have effectively ended the option for pilots to do the mega backdoor Roth in January/February each year. In response to this they started pushing the MBCBP as an "optional" plan. To be clear, nobody has any knowledge of the treasury department approving a MBCBP or other VEBA that is optional on an individual basis.

The tax implications were discussed in detail in other threads, but IMO, the answer to whether the MBCBP is better than taking your overages is maybe. It depends on your timeframe, the as yet unknown plan terms, your personal financial priorities, and what other options you are comfortable with. I'm sure that the active real estate investors here will do much better taking the money than the MBCBP possibly could. Personally, after I max out my 401k my next financial priority is college expenses for my kids. In the end, the goal of tax deferral may or may not be a benefit. Rates could go up, possibly significantly. If you retire with a significant traditional 401k, your RMDs in retirement could put you in the same tax bracket you were in while working.

Also, while there is a reduced risk of underfunding the MBCBP, there is still a risk. And that risk will increase if we as a group demand a higher targeted rate of return. You don't own any of the money in the plan, it is grouped together, invested and then distributed to participants when they separate. You are given a "nominal" balance to make you feel like its just like your 401k.

To be clear, I support the inclusion of the plan as an option. I think it will work well for many of us. If it resembles what was initially proposed I will likely participate in the last 10-15 years of my career. But for now, if it's not optional its essentially a "tax" that takes my DPSP cash away and does very little with it in return.

 

I think the biggest MBCBP concern was addressed when the plan was conditionally approved as optional. Trapping compensation in the MBCBP that pilots would otherwise prefer to spend or invest elsewhere is worrisome. This is further compounded by the potential that self-inflicted 401k excess funds could be forced into the MBCBP. IIRC this was addressed last year when the MBCBP proposal was limited to 401k excess on earnings above the IRS limit, not self-inflicted 401k excess via after tax 401a contributions. There is concern about the unknown. Pilots who exercise the most control over their finances seem to be the ones most concerned, while the set it and forget it crowd seems generally in favor of it.

 

We received two costing estimates from ALPA E&FA during my term. The first one was presented in December of 2019, at the conclusion of the Protocol Agreement signed in April of that year, and the number was high enough for Jim Graham to take one look at it and immediately take a favorable view of mediation. The second full costing estimate was presented in December of 2021, and the number was naturally higher, because of the basic passage of time, plus the fact that direction in Section 6 hadn't changed in more than a year.

Any MEC has two choices for the strategy they use in crafting an opener. They can "stick to their guns" by crafting proposals on the basis of market influence and the vulnerabilities of the other side designed to survive first contact with the NMB, or they can "shoot for the moon" with a two-step process of making high-cost initial proposals with the intention of retreating to more reasonable positions later in the process. The Delta MEC at the time adopted the second strategy. I have no idea if they have made inroads towards the second step of "shoot for the moon," but the recent Policy Manual change concerning retro pay makes me suspect that they haven't.

I think we're stuck on the moon, and one-third of the MEC can now stop any deal from going to the pilots.

 

Oh, you mean like TA1?

Considering negotiations have been on a regular schedule for months, I'd say whatever is happening now has survived "first contact" with the NMB just fine.

Our Section 6 position might not have changed in more than a year (I'll take your word for it), but the pilot compensation market sure has. I just hope the MEC adjusts our economic asks upward before the company accepts whatever our position is now as a win for them.

In fact, I bet if the company accepted our table pay rate position tomorrow, the mediator would say to us, "guys, this is a year old now, are you sure you don't want to make any changes?"

One thing is certain: you'll be negotiating against us no matter how much leverage we have. Thank goodness you only have one vote now.

 

I guess in your world the money you take out of the MBCBP in retirement will magically not be taxed?