At the end of the day, the minimum balance is a multi billion dollar ask that is solely for a small section of our list. If implemented it would lag only pay rates as a percentage of the gains in this deal. If there ever was majority support for it, that ended with the VEOP. The polling probably backs this up, and my guess is that the min balance dies in end game negotiations.

 

This is false. It's beneficial for most, and especially younger pilots to do Roth contributions for several reasons. Two of the most important are that I think a lot of pilots with a significant time left at Delta will have the same or higher income in retirement as they do now. Second, being able to move your money into an IRA gives you many more options as far as investments. Third, tax rates in my opinion (guess) are probably going to be higher when we retire.

Having the option to defer taxes is great, but ONLY if it's an option. Honestly it might be worth it to give the DZ the money they're demanding just so they don't mess up our retirement plan with some kind of forced MBCBP.

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I'm on the opposite side.. I took the early upgrade because we don't have kids (yet), IVF and Surrogacy is stupid expensive and until next year it had zero coverage, (and we would still be $70k out of pocket, IF the coverage for next year had been available when we started) .

Since DZers havent posted their numbers, I'll post mine.
I'm 43. 44 in January. So just over 21 years left.
Hired 2017, but got stuck in Afghanistan so a early 2018 seniority date

Own (mortgage) a 3/2/2 1400 sq foot house in a nice but not super expensive neighborhood in Virginia Beach. I'm near Chix Oyster Bar/Hot Tuna. Yes, the house with the insane Christmas lights that can be seen from 37,000 feet. Mortgage is $2200 a month, will be paid off a year before retirement if I just pay off as scheduled.
I own no boat, no beach house, no mountain house, no airplanes.
I do own a camper I bought used, and just bought my first new truck in 20+ years. Wife drives a 10 year old 4Runner.

$401k balance (by dumb luck, four of my previous companies were also Fidelity
$334,000 this morning. That's Delta, Part 135, Oil Company, L3, Oil Company 2 and I rolled two other 91 and engineering jobs into it.
$63,000 in TSP after 24 years (in honesty, got cleaned out when I was 28 in a divorce)
So right around $400k between the two.

5500 point retirement from the Reserves as an O-4. $3,453 a month once I turn 60 in todays money (37.5 retirement at 60 vs 50 now an active guy gets)
VA disability 70% is $1650 a month. (honestly this is my fun stuff budget, truck, camper, dirtbikes, fuel for trips, christmas lights)


I put in 5% on top of the 16%, and I add 1-2% a year to that. I am probably going to hit the 401k limits from next year on. (wasn't a Captain all year this year and was on Mil leave last year, so ALV only no contributions)
Screw it, I just put it to 7%.

This is a 5 year Captain, hired at 38, turned 39 in indoc.

What are the deadzoners working with? I've posted every asset I have. Which is my savings and my house. I did have a broke even rental house but we sold that in 2020 and used the equity to fund a round of IVF and more cushion because UNA debacle.

 

This provision takes care of the Roth conversion portion. It is a nice enhancement to the plan and takes care of the objective many pilots have with the 401a after tax technique. The second piece is that 401a after tax contributions can be rolled over to another custodian with a wider range of investment options. This second step is how you get the money into a Self Directed Roth IRA.

*Investing with a Self Directed Roth IRA should not be taken lightly. If you can't explain UDFI and UBIT, spend 30 minutes searching and reading before touching SDIRA funds.
** Solo 401k funds may not subject to UDFI or UBIT, but that is well beyond pilot investing techniques and requires setting up your own company with a retirement plan.

 

Did you calculate lost investment value from money used to prepay your taxes.

Some people decide to prepay but don’t include the investment opportunity loss of the money they gave the government to do that.

I haven't seen math work out when the taxes used to prepay a Roth are instead invested while the money stays tax deferred.

Biggest problem with funding a Roth is it forces larger growth demands, mediocre returns, creates a mediocre balance which creates mediocre low taxes withdrawals.

It’s a tall order for someone in their 30s, or early 40s to already have a deferred balance so large it can generate 100-140k a year using 4% rule.

Total crapshoot if your prepaying taxes without a deferred balance already greater than 1-2 million.

 

I’m not a deadzoner or a UNA. I’m wondering how many actual pilots are we talking about getting a min balance? Who really qualifies? If we’re making up for lost time for people who got furloughed before, is there a provision for the guys who might get furloughed in the future? Maybe that’s not a consideration since we all know this profession is totally stable now and will never face another downturn.

 

Assuming an equal amount of money spent both ways, there is no lost investment value because of prepaying taxes. The sole determining factor in Roth vs traditional is marginal rate at time of deposit and marginal rate at withdrawal.

Under 401k rules, Roth actually has a leg up because the money you use to prepay taxes doesn’t count against your limits and you effectively get to “invest” a higher amount.

 

Excellent question. Min balance was expensive up to a point and then dropped off to nothing. It was an idea that provided a bridge of a brand new contractual benefit (MBCBP) with an unheard of increase to the DC, most of which benefit the most junior pilots on the list. Pilots late in their careers generally want to see the pay increases. The gap was bridged through the min balance, which actually applies to every pilot, but those with 5-7+ years would have seen a greater accrual from the increased DC benefit than those with less than that time. That was all pre-covid and where we are today is different. Polling will be different and the demographic have shifted.

Interesting take from today's NN is that not only has vacation value surpassed all passenger carriers -- see the last graphic published by ALPA, but accrual has been accelerated, meaning that junior pilots will get to more vacation faster. While the value has gone up for everyone, junior pilots certainly get more of a benefit in this particular part of the contract. The point: negotiators and the MEC are trying to find a balance for all pilots in negotiations. Demographics are affected differently, some more obviously than others.

The world did not begin the day any single pilot was hired.

 

The truth hurts sometimes. And I can be a monumental prick. Who cares. I speak the truth.

 

You might speak the truth but it seems like you are having a hard time accepting the hard truths of how this is going to play out.