I really need DAPLA to address this concept for line conversation. That’s what is being discussed as the MBCP. A cash balance plan is literally a new idea (for airline pilots) to utilize the excess (DPSP cash) into a tax DEFERRED account. Much like a 401k. It would allow the DPSP CASH to go into a managed account (in your name) and managed by the overall age profile. When you retire, you have a few options. Lump sum, annuity, or roll into a traditional Ira. Right now (the latest I have been told) is 75% of pilots hit the 401 limit (personal contributions and employer contributions) and the result is DPSP excess. That is simply the 16% is paid out as DPSP CASH on the paystub. Guess what, not only are you paying tax at your rate- the company may be too depending on your earnings for SS, Medicare, etc. The company saves a lot of money here. MBCP shields those taxes.

Now the MBCP allows all the excess above the 401 limit to be put into a MBCBP. Admin fees are small on this and far below normal payroll taxes and your balance is yours. The money deposited is invested based on the group longevity scale (typically). It’s hedeged to the age of participants and when you retire, you have no less than what you put in, but gains subject to the market. When you retire you can do an annuity, lump sum, or roll into a traditional IRA. The company saves money in doing this, but you also are not taxed on this until you retire and theoretically are at a lower tax rate compared to the tax rate in earning years. From a tax cost standpoint, everyone wins, and it’s like another 401k (traditional).The option of being in/out can exist and the rate if return is likely less than simply stating the S&P500 as a benchmark, since the investment manager must be conservative to honor all receipts.

There is a reason the MBCBP is used by High earning individuals (typically doctors and lawyers) as there is a small window of years where the plan makes sense, for us- we can use it for decades. The company literally pays themselves to have this in a tax conversation and (once the treasury agrees to the plan) pilots need to decide if being a bit under market benchmarks makes it equitable in the tax deferral (smaller gains) vs investing the money post tax rate in an investment account with current tax liabilities.

I’m an FO, knowing I won’t get a pension and have prepped for a great retirement with the 401K, Roth, Backdoor Roth IRA, HSA, etc, and it seems we are really missing the information of what’s available to move mindsets off a pension that won’t happen. Some really seem to think a “lump sum” will happen and fix the gaps- and that’s another conversation, but hearing “DPSP cash is the fun fund” simply makes me try really hard to keep my head straight when the next conversation point is retiring.

 

Point of order: No one got that amount of stock with the JCBA. The most senior captain was less than half that. After ALPA released the shares from Athena? Capital, the highest value was less than 1/8th. Maybe that stock has grown in value over the past 15 years, but it was never accrued that high back in the day.

 

I can tell you that those PBGC numbers are pure BS. I probably am in the top 5% if not top 1% for PBGC money for pilots still working. I would have received 4400 a month until SS offset and then it drops to 4200 if taken at Age 60. PBGC payments go up 11% per year delayed. At age 65 my number is 7000 to 7200. Given his claimed 6800 at 60 his 65 number would be around 11,450.00. That would have required a FAE in 2003 of around $500,000.00 and at least 18 years of service but probably more.
There is no MPP contract value. That’s completely fictional. All pilots were cashed out for the value of the account. Amounts ranged from 80,000 to about 115,000 at the top. I seriously screwed up and put mine in a annuity that I started drawing in Oct. Pays about 1000 a month.
The stock money you mention I assume is the stock claim the union sold. 141,000 is well below what he should have received. A more likely number is 350,000 if not higher so nothing posted makes sense. The claim was sold for 2.1 billion.

 

Half of our pilots were hired since 2014 and honestly have no idea what any of this means. There’s a good chance they don’t care. Many of them were playing little league or in preschool on 9/11. Many hadn’t started flying or even driving when bankruptcy and the merger happened.

What binds us all is our current contract, current work rules, and current pay rates. Hopefully the MEC and NC stays focused on issues that affect the masses and don’t get too bogged down on fringe or special interests.

 

Your post is basically true, but would have been more appropriate appended to Bucking's totally BS numbers. Sailing was correcting the b.s. numbers and the only thing I question your post on is continually trying to vilify Sailing. Not necessarily you in particular, but the collective APC forum posters.....all 10 of them(the regulars)

Those newbs who "don't know, don't care" exit the discussion with only 1 take‐away.....Sailing has nothing of value to add to any discussion and should look o immediately find fault with all his posts.

I'm not sure that is in the best interest of open communications

Of course...JMHO

 

I remember someone explaining all the pots of money from the bankruptcy era and I copied/saved for my own education and re-reading, so I've reposted it here.

DISCLAMER: I was not here during that time, so if anyone who was has corrections to the below date, please chime in.


"The calculations to try and bring each pilot to a 49% DB were based on the DB plan surviving as a frozen plan like NWA. When that plan was terminated the 49% went out the window. It had nothing to due with note or claim money. After the termination there were 4 pots of money for each pilot. The MPP plan, note money, PBGC money and DC going forward. Since senior pilots were projected to do better than junior pilots a decision was made to try and provide all pilots a roughly equal retirement. The note money was retargeted by plus-ing every pilot with less than a 205,000 dollar FAE up to 205,000 and a minimum length of service payment added. While the DB plan was frozen the DC money was targeted with some junior pilots getting up to 18% and most pilots with over 18 years of service under 2%. If the DB plan ended up terminated the DC plan was supposed to be retargeted to make that loss of DC money up for the more senior pilots. When the DB plan was terminated the DB plan went to a flat 9% for all pilots rather then try and make the senior pilots whole.

There was also a fifth pot of money which was the claim for delta stock. It was the largest component but not directly considered retirement money but later ruled as such by the IRS and allowed to be rolled into a Retirement account tax free.

The two note and claim payments had approximately 150,000 that was withheld to be distributed over a 3 year period tax free at the 415c limit. This meant pilots could not fund the 401K for 3 years and all DC money was distributed as ordinary income. With the delayed IRS ruling finally allowing a tax free rollover of the note and claim this turned out to have been unnecessary however the net result was the same."

 

The biggest wrinkle with the lump sum payouts, at both DAL and NWA, is the pilots were suffering under a sudden 40%+ pay cut. Many had to use that lump sum money to make lifestyle adjustments. Yea, we should all live within our means, but when such a large shock occurs, you can't make adjustments all at once. Downsizing takes time (big house to small house), assets need to be disposed of (boats, cars), kids in school need to be allowed to continue to at least the end of the semester/graduation.

Sure, while you could count that money as "retirement", the cold facts are that many had to use that money to adjust. Once those people got back on their feet, and started contributing, boom, the financial crisis happened in 2008, and it would take six years for the market to recover.

 

Absolutely. During BK, went from DC-9A to 320B. $185 to $86 in less than a year. 3 kids, extra side gig, wife back to work. Yes, that 65k claim/note money before taxes went to keep many in their homes.

Yes, some of the deaf comments from a certain demographic/generation that makes comments about it conjure a certain F you response. I would say there are 2000 pilots who didn’t make out well with any note/claim. No real targeting that made a difference (15%-19% of BK wages was 5-8k per year). Frozen pension minute and getting smaller with inflation.

Not sure what the answer for those people are.

 

The funny part is when I was an ER FO, the DZers who yelled the most about getting hosed, also on the same trip showed you pictures of their 2nd house on a lake, beach or mountain, their boat, and their plane.

And were horrified when I told them I drive a 20 year old pickup and my wifes car is 10 years old, and we lived in a 1400 square foot house. (welcome to the reality of being a "lost decade" guy) and we were trying to build up a retirement and pay off some medical bills.

People got hosed in banruptcy. Some guys did better than others with PBGC, Note and Claim, and the merger. I wasn't here for any of that.

I suspect the guys who got really, really hosed, have been gone since before I was hired.

 

It's highly dependent on individual demographics. I can't speak for fDAL, but the TDC at NWA was shaped like a bell curve. It was targeted towards pilots who were older and had less time left. Pilots who had already reached the estimated 50% FAE received very little to zero, because their frozen DB already met the goal. The young pilots on the other end didn't get much because it was assumed that they had the time to make it up. It messed up the program when they changed the rules under the JCBA.