That is true about pilots already reaching the cap, but only $22500 of that money was contributed by the company. The rest belonged to the pilot. IE, 401K, excess sick bank, after tax contributions. For example, if someone has a full disability bank and a full sick bank and makes after tax contributions up to the IRS cap, the company pays them for the unused sick bank as regular pay at the end of the year.

 

Guys can hit the IRS income cap using their own money. Increasing the B fund even without cash over cap means that guy can hit the cap with less of this money. That money can be put in other retirement vehicles, investments or spent by the pilot. Too many people say a B fund increase without cash over the cap doesn’t help a WB captain and that is just false. Every percent increase is $2700 towards the IRS limit that doesn’t come out of the pilots pocket. Not that we would get it in addition to our existing A fund but a 20% B fund would nearly hit the IRS cap $55000 (age <50) with all company money. You wouldn’t need to put your money in if you make $270k. A guy who makes less than $270 would hit the $55k savings cap earlier in your career using less of your money.

 

All good points. And sick sell back should NEVER be considered as part of our retirement planning strategy. If your financial well being in retirement should not be based on having a full sick bank. If a guy gets sick now he might not make retirement goals/ requirements. Sick sell back is just EXTRA if you are fortunate enough to have it.

 

No, that's NOT what it means. There are 2 Caps associated with DC limits.
One is the Salary Cap, currently at 275k. Once you hit that Salary Cap, the 8% (9%) Contribution from the Company Stops...and, as TonyC said, your contribution rate for the rest of the year is 0%. So, effectively, for a WB Capt---your actual B fund Contribution is say in the 5% range of your annual compensation.

The Other DC limit is the Combined Contributions that you can defer, this year pretty sure it's 55k. That amount is the Company's B fund Contributions, 401 Contributions, and potential After tax contributions.

(A big After Tax contribution early in the year can impact on the "free" money from the Company and that is why Our Union recommends a max of a 5% After Tax contribution. Personally, I suggest starting with something like 3% and then ramping it up after the B fund contributions limit is hit)

 

As an aside,
you are a WB Capt. Pay rate is 313 or 313000.
The extra 1% in the B fund will net you 2750$. Cash over Cap is $3420

 

You do realize that you just agreed with what Blob and I are saying, that currently the company only contributes a maximum of $22500 towards the IRS contribution limit. Also, that raising the B fund contribution to say 20%, as Blob suggested, results in the company putting in the maximum contribution of $55,000 while the pilot got to keep their 401k contribution and after tax contribution to invest elsewhere or to spend as they like.

An increase in the B fund will result in more free money for everyone, unless you don't know the rules and put to much of your own money in the DC plan. Of course, I wouldn't turn down cash over cap either.

Enough of this tangent though, why won't the union tell us how much more increasing the A plan would be than the currently proposed VB plan?

 

As Pinseeker said, you just agreed with what we said. Also if a WB CAPT makes $313000, then the 8% of the IRS income cap of $275,000 is 7% of his effective income...not 5% as you assert. Numbers matter. Bottom line, any increase of B fund up to 20% results in the company giving that WB captain more money.

You seem hung up on not getting cash over the cap on B fund. Why aren’t you concerned about VB being capped at the same IRS limit?

Here’s a hypothetical question. Using a WB CAPT making $313k and current IRS limits, would you rather have 10% with cash over cap or 12% B fund capped at the limit?

 

Please, explain to me using small words exactly how it is possible for a FedEx Pilot using his "own" money to hit the 275k Income limit?


And, for the VB limit...you realize the DC limit is tied to the benefit level.
As an example, getting to a 130k Annuity takes a hefty annual contribution.

If you went with a how much would I need to accumulate for 130k in withdrawals from my savings, then typical ROT is 4%. Which would be 3.25M. And since every VB opponent seems to be worried about the economy going sideways for the next 25 years is the equivalent of 130k a year in savings, each and every year for 25 years.
Or, at a 6.5% return, save $4,400 dollars each and every month over 25 years.

Would much rather the VB limit was tied to the DB limit. Or better yet, 1000@ WB Capt's top rate...but, thinking the NC goal is a modest increase that could actually happen versus the 50% Income replacement ratio SS was beating on the drum for throughout 2013-15

 

A pilot hits the $275k income limit when his annual credit hours times his hourly rate equals $275k. I’m assuming you meant something else so I’m not following your question.

I don’t think anybody here is trying to advocate replacing the A fund with all B fund. A balanced plan is what most want. I am just saying that significant increases to the B fund are a better way to address the declining purchasing power of the A fund as opposed to switching to VB. I disagreee with the misinformed individuals who say that increasing the B fund does not help WB captains. It does. Increasing the B fund does helps those who have more years until retirement more than those who retire tomorrow but those who have a longer retirement horizon will see a bigger reduction in the buying power of their A fund. No big winners while others are left with uncertainty.

 

Considering no one said that, I don't think you will get an explanation. The pilot does use their own money to hit the contribution cap. As a matter of fact, that is the only way that a FedEx pilot can hit the contribution cap.