Well it’s already in the PWA as being optional. If it can’t be optional ALPA has said there would need to be another vote.

And if you aren’t forced to participate, what’s the harm? I have been a very vocal critic of what was a poorly designed and improperly sold plan from the start. But the plan has improved and there potentially is value there now for the majority of the pilots.

It won't be optional. The IRS doesn't like the complexity of not pooling the funds and opting in and out annually. This begs the question, can it be done fully funded by the company? 16% discretionary and up to the pilot after the cap just as we have now so you can continue to manage 401k and current percentage as we always have. On top of that 4% contributed automatically as an imputed income benefit. It could work like a conventional pension owned by the individual and managed by a third party with no further employer obligation beyond funding.

We don't want a pension. If it's not optional, then it needs to be taken out or voted down. I chose Delta over FedEx because I DIDN'T want a pension.

Even without adding in state income tax, you're looking at a 40% haircut for DPSP cash. To just get BACK to zero, it takes a 67% return. Average S&P returns over the past 20 years is about 8.5%, slightly higher over 40 years (not inflation adjusted). Let's be wild and assume the S&P returns 10% a year, which, honestly, will be on the high side. To recover the money you lost day 1, to get the 67% return, you would need 6 years just to get back to zero. And that's completely ignoring 1) The returns you have have gotten on the full amount and 2) Any capital gains you would have suffered on your S&P strategy.

And this isn't a day one math exercise. Every single year you're taking a 40% loss on your DPSP cash, which means that recovery is always rolling out 6 years in front of you. Time it wrong, and it could be much longer. And if you are in a high tax state, it's even worse. Yes, it's a conservative investment, but I assume everyone has those to at least a small degree, and it would allow you to shift whatever percentage that's there to a more aggressive plan. PLUS it would be in place if there are any future, unforeseen tax increases.

It's not a pension in the sense its a debt owed. It's a pension in the sense that the benefit is distributed after retirement but the asset is individually owned. The problem with pensions is ownership of the assets. There doesn't need to be a MBCBP, it was an answer to retirement funds being taxed. If we don't care then it's just like adding it to the hourly rates. Those rates are always negotiated with peer rates as the backdrop so upping the retirement percentage would be my preference and I'll just invest the funds after tax for retirement. I can deal with the overage now and will do so inthe future absent some tax shelter. But we have to keep in mind the real reason for this.

Many good posts on this thread - thanks for the things to consider. Wish we had a thumbs up to reinforce those who take the time to post good information.

I think you're conflating the MBCBP with the VEBA.

You're going to be taxed (most likely at the same rate) on that money as income when you pull it out of the MBCBP in retirement anyway. So there goes your tax savings that you agreed to sub par investment returns to get.

This is the same simplistic, incorrect analysis done initially by the R&I committee.

When you eventually take a withdrawal from the MBCBP, it will be subject to income tax at your marginal rate. So no, it’s not an automatic 40% loss on dpsp cash. If your marginal rate in retirement is 40% then it’s a wash. Yes there are other items to consider in the equation, but you are absolutely not taking a 40% loss with dpsp cash.

Here was the NC’s negotiations update on MBCBP emailed in January 2022:Market Based Cash Balance Plan (MBCBP) Update

Negotiations between ALPA and the Company are now complete on the MBCBP plan design, and the final plan document is being drafted to reflect the negotiated provisions of the plan. The MBCBP plan at Delta will be a first in the airline pilot profession, with several of our peer pilot groups now negotiating for similar plans. Some of the negotiated provisions that will be unique to the Delta pilot’s plan include:

• A “spill” funding concept, which prioritizes DC contributions going first into the 401(k) plan (up to Internal Revenue Code limits) prior to any money being deposited into the MBCBP. This “spill” concept ensures that pilots retain maximum control of their retirement money via the self-directed 401(k) plan to the greatest extent possible, even with an increase to retirement DC contributions being sought in C2019. This is a cutting-edge plan design construct that is not only unique to Delta pilots, but unique to other MBCBP plans currently in existence today.
• An investment strategy has been negotiated with a targeted asset mix that will essentially mirror the “Retirement Lifecycle Fund,” an investment option currently available in the Delta 401(k) Retirement Plan for Pilots. This allocation will target a mix of equities and fixed income instruments, and has consistently earned a rate of return which is greater than was initially expected for the Delta pilot’s MBCBP plan. While recognizing that past performance does not guarantee future returns, this strategy has returned over 8% in the past year, with annualized returns over the last three, five and 10 years of 10.36%, 8.08%, and 6.5% respectively. This negotiated investment allocation adds to the value of the MBCBP for Delta pilots, and is a significant improvement to what was originally thought possible for this plan.
• An “in-service distribution” feature was also negotiated in the plan. This will allow pilots who reach age 59 ½ to take a distribution of all or a portion of their MBCBP balance while still in active service with Delta. Options for distribution include rolling over to an individual IRA, converting the balance into an annuity, or taking a lump sum taxable distribution.

Note: The in-service distribution option is available to pilots who are still in active service with Delta so long as their MBCBPbalance is no less than the sum total of all contributions that have been made into the plan, consistent with the IRS’s “preservation of capital” rule within the MBCBP.



Prior to the plan’s full implementation, there are two remaining hurdles that must be navigated:

1. The Company still operates four Defined Benefit (DB) plans (including the former NWA plan), and relief funding rules are still available under the Pension Protection Act of 2006 (PPA) for these plans. While these plans are now well-funded and are not utilizing this relief, under PPA the U.S. Department of Treasury may object to the establishment of a new DB plan at Delta so long as this relief funding is still available. The relief funding option expires September 30, 2023, at which time the Treasury can no longer object.
   
   ALPA and the Company jointly approached the Treasury at the beginning of 2021 to determine if they would voice an objection to our new plan. While Treasury responded in a positive manner at that time, they have not provided any formal guidance since, despite several subsequent attempts at contact. We will continue to utilize all available resources to get an answer, however without Treasury assuring that they will not oppose a new plan, implementation cannot begin so long as the funding rule relief is available to Delta. The worst-case scenario is if Treasury refuses to provide guidance before October 1, 2023, at which time the plan may then begin to operate.
   
2. Much like FAA regulations, application of the Internal Revenue Code (IRC) is often left to interpretation by subject matter experts like accountants and actuaries. In cases where a plan sponsor (such as Delta) requires clear guidance on a perceived interpretation, a “Private Letter Ruling” (PLR) process exists in which the IRS can provide a definitive answer. Despite our various subject matter experts feeling confident that our design is compliant with the IRC, the Company felt there were several elements within the Delta pilots’ MBCBP plan design which required some clarification to move forward.
   
   Among those issues was the concept that our pilots could direct ALPA to include or exclude them from the new MBCBP(“optionality”) on an individual basis. A PLR was submitted last year asking this very question, and when the IRS finally responded in December, they declined to provide guidance, essentially stating they required further information prior to issuing any ruling.
   
   We continue to work through the bureaucracy of the federal government to implement this plan as soon as is possible. Please keep in mind the following:

• In late 2020, the Delta pilots ratifiedLOA #20-04, which included an “optional” MBCBP.
• ALPA has been working to establish the plan, as advertised, ever since the ratification of LOA #20-04.
• There has not been an unfavorable interpretation regarding the “optionality” feature from the IRS.
• In the event there is an unfavorable interpretation by the IRS of our “optional” plan design, the Delta pilots would have the opportunity to decide, via membership ratification, on their support of a plan in which all pilots would be required to participate.
• While ALPA and our professional consultant subject matter experts remain confident that the IRS will permit some form of an “optionality” component, the Company is unwilling to assume the risk of implementing the plan without clear guidance from the IRS.

Retirement DC contribution increases being sought in C2019 assume that the MBCBP will be established to accommodate the increased funding. Without a new plan such as an MBCBP, further 401(k) increases will merely add to taxable income for most of our pilots. Our ability to increase Company-paid retirement benefits going forward is severely limited without the MBCBP to supplement the 401(k), especially with the potential for future political pressure which may even further limit 401(k) contributions.



While the implementation is taking longer than anticipated, the NC is confident that the MBCBPwill provide immediate enhancement to Delta pilots’ retirement as well as an outstanding vehicle with which to improve our total Company-paid retirement package. We appreciate your patience as we navigate the slow process of working with the federal government bureaucracy. Please watch for updated educational materials on the MBCBP, along with relevant Q&A over the coming weeks or months as we near implementation of the plan.
Fly Safe,



Chad, Eric, ******* and Rich