First Break

Absolute nonsense. What you are suggesting would likely violate numerous Labor, IRC, ERISA, and SEC laws.

ALPA is suddenly in bed with Blackrock? Good lord.

Gone Flying

I’m guessing since ALPA stated they wanted pilots to be able to opt in/out each contract cycle in previous memos the fact this is a one time deal came from the IRS/ legal advice.

capncrunch

Not nonsense at all. The original iteration of the MBCBP was to be managed by ALPA and if you and your spouse died with money in the account, that money went to ALPA.

Judging by the May 2022 APC date you were not around the first time this came up and got voted down.

game

“ITS MY MONEY AND I NEED IT NOW”
1-866-386-3102

That’s my legitimate reason for opting out.

First Break

Just wow. Your conflation of the TA1 VEBA, and the MBCBP illustrates your lack of knowledge on how either plan works.

And I was strongly opposed to the way the VEBA was proposed during TA1 and voted accordingly.

Rinaldi

I have a son in med school. I know I’m not obligated, but I’m paying for it. The extra DC money goes a long way toward paying for this. The tax benefit of the plan is way less than what we save by my son not having to take out student loans. This if the flexibility I’m talking about. For my family, opting out is a much better choice.

capncrunch

Feel free to post literature from that time that proves me wrong.

First Break

July 30, 2016
16-10
What Is a VEBA?
A Voluntary Employees’ Beneficiary Association (VEBA) trust is designed to provide life, sick, health, accident, and other similar benefits to employees, retirees, and their beneficiaries. As part of the current negotiation, Delta has agreed to the establishment of a new VEBA for Delta pilots for the purpose of providing tax-free reimbursements of pilots’ post-retirement healthcare expenses.
The main advantages of having this type of VEBA are as follows:
• Contributions to the VEBA are pre-tax
• Assets held in the VEBA grow tax-free
• Healthcare benefits paid from the VEBA are tax-free to the participants
VEBA Oversight
The Delta MEC would appoint a pilot VEBA Board to oversee the VEBA program and determine any annual and/or overall funding limits. The VEBA Board could institute annual and lifetime caps on VEBA contributions based on input from the pilots through their representatives. The caps could vary for different pilot groups, but would be mandatory for all pilots within that group. For example, lower caps could be instituted for TRICARE-eligible pilots. Upon inception of the VEBA, IRS approval will be sought to allow pilots to customize their deposits. An IRS ruling on our request will take some time to receive. The VEBA Board would also manage the investment of VEBA assets.
Funding
Each pilot would contribute $1 per pay hour into his VEBA account. A pilot with 1,000 pay hours in a year would therefore contribute $1,000 per year. The VEBA Board would determine whether additional contributions would be made from the “excess” cash amounts that Delta currently pays to pilots that cannot be contributed to their 401(k) plan accounts due to restrictions in the Internal Revenue Code, i.e., the 401(a)(17) and 415(c) limits.
The assets in the proposed VEBA would be used by retired pilots to fund their post- retirement healthcare expenses. It is estimated that a couple retiring today at age 65 will need approximately $245,000 to cover future retiree healthcare costs. A retired pilot (and spouse) could withdraw the money in the VEBA account tax-free to cover some, if not all, of these retiree medical e1xpenses.

Even a retired pilot enrolled in TRICARE will have some medical expenses. For example, all TRICARE participants must be enrolled in and pay for Medicare Part B. The chart below shows 2016 monthly Medicare Part B premiums, which are based on income.
If your yearly income in 2014 was
You pay each month in 2016
File individual tax return
File joint tax return
File married & separate tax return
$85,000 or less $85,000 to $107,000
$107,000 to $160,000
$160,000 to $214,000 above $214,000
Tax Implications
$170,000 or less
$170,000 to $214,000
$214,000 to $320,000
$320,000 to $428,000
above $428,000
$85,000 or less Not applicable
Not applicable
$85,000 to $129,000 above $129,000
$121.80 $170.50
$243.60
$316.70 $389.80
While funding of the VEBA is based on a pilot’s earnings, the IRS considers the funding to come from the employer. This results in the contributions being exempt from the pilot’s income taxes and employment (Social Security and Medicare) taxes.
This method of funding creates a tax trifecta: • Contributions are made tax-free
• Accounts grow tax-free
• Benefits are paid tax-free
When Delta deposits $1 of a pilot’s pay per hour to his VEBA account, it reduces the pilot’s taxable income by $1. That $1 would therefore cost the pilot only about 70 cents because the pilot would not owe income tax on the $1 contribution. However, the pilot would still receive profit sharing and 401(k) contributions on the $1. Finally, the VEBA contributions would be counted as part of a pilot’s pay when determining the pilot’s disability benefits.
Pilots’ Survivors
A deceased pilot’s VEBA account is not part of the pilot’s estate. If a pilot passes away with money remaining in his VEBA account, that money remains available to his spouse and/or eligible dependents. When the spouse dies and his dependents are no longer eligible, any money remaining in the2 pilot’s VEBA account would be allocated to all other participants’ VEBA accounts. (ALPA plans to seek IRS approval to allow the

amount remaining in a pilot’s VEBA account to be paid out to the pilot’s designated beneficiaries.)
Conclusion
The establishment of a VEBA, with ongoing contributions to pilots’ VEBA accounts being used to pay for post-retirement healthcare benefits, constitutes one more vehicle to provide tax-free benefits to Delta pilots and their families.
Additional questions can be asked and reviewed via the Negotiations Contract 2015 FAQs data bank at dal.alpa.org.
Thank you for your continued engagement and support. Steve, Ron, Jeff, and Heiko

Trip7

Delta pilots can do basic math. That is all one needs to figure out if this plan is right for you. I don't need a financial advisor to tell me that.

The MBCBP is simply a tax deferred vehicle aimed to grow at 5%. There are tax advantages along with no DALPA dues. For a pilot with 5 years or less left I can see significant benefit from opting in.
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First Break

I think any qualified financial advisor would probably tell you exactly the opposite. The tax arbitrage available through one of these plans is amplified by time. The power of compounding interest comes from time, and the youngest pilots will benefit from these plans the most.

Again, don’t take anyone on this web board’s word on this, including mine. Seek input from a qualified advisor that you trust and make the best decision for your situation.