Retirement Question
03-27-2019, 06:34 PM
#11
On Reserve
Joined APC: Apr 2016
Posts: 11
At the risk of asking pilots for financial advice, what’s the best way to maximize FedEx’s retirement? Obviously hit high-5, but what about maximizing 401k without leaving company money on the table? I heard if you contribute too much to the 401k, the company stops matching early...
03-28-2019, 02:06 AM
#12
Gets Weekends Off
Joined APC: Feb 2008
Position: Bus
Posts: 109
Originally Posted by Flying Boxes
3). Regular sick account (RSA) of 72 hours a year go into a Disability Sick Account (DSA) if not used. If DSA goes above 686 hours at the end of the year (about year 10 of not being sick...ever ), FedEx will deposit extra sick hours into retirement account at pilots hourly rate. 72 hours * $XXX.XX/hour = $XX,XXX. IF DSA payout exceeds the IRS annual limit ($56,000 under age 50 or $62,000 if 50 or older), it paid out as taxable pay.
At the risk of asking pilots for financial advice, what’s the best way to maximize FedEx’s retirement? Obviously hit high-5, but what about maximizing 401k without leaving company money on the table? I heard if you contribute too much to the 401k, the company stops matching early...
Is extra sick pay contribution the only means by which this might occur? If this is in fact the issue, how would receiving a sick pay contribution at end of year elicit lost contribution?
03-28-2019, 02:32 AM
#13
Line Holder
Joined APC: Sep 2007
Posts: 51
Originally Posted by CAVOK84
I may be missing something. Assuming a pilot contributes the max allowed to the 401K, a $500 match and an 8% contribution to the limit of $280,000-- how are we likely to reach the IRS annual limit of $56,000?
Is extra sick pay contribution the only means by which this might occur? If this is in fact the issue, how would receiving a sick pay contribution at end of year elicit lost contribution?
Is extra sick pay contribution the only means by which this might occur? If this is in fact the issue, how would receiving a sick pay contribution at end of year elicit lost contribution?
03-28-2019, 03:12 AM
#14
Gets Weekends Off
Joined APC: Feb 2013
Position: CRJ200; FO
Posts: 391
Originally Posted by Flying Boxes
1). If a pilot contributes $1,000 to a 401K for the year, company gives a $500 match. Yes, that is it for employer match for 401K.
2). FedEx also contributes 8% of income up to IRS limit ($280,000 this year I think) into a B Fund. $280,000 * 8% = $22,400. (goes to 9% in Oct of this year or next, not sure which year)
3). Regular sick account (RSA) of 72 hours a year go into a Disability Sick Account (DSA) if not used. If DSA goes above 686 hours at the end of the year (about year 10 of not being sick...ever
), FedEx will deposit extra sick hours into retirement account at pilots hourly rate. 72 hours * $XXX.XX/hour = $XX,XXX. IF DSA payout exceeds the IRS annual limit ($56,000 under age 50 or $62,000 if 50 or older), it paid out as taxable pay.
4). Pilot can contribute $19,000 into 401K. And if IRS annual limit has not been exceeded, FedEx allows after tax contributions upto the annual IRS limit.
5). A Fund is 2% for each year of service up to max of 25 years * high 5 year average (limited to $260,000 by pilot contract). Max pay out is $130,000. Not part of IRS annual limit mentioned above.
Comparing to Delta, they contribute 16% of eligible earnings...upto the IRS limit of $280,000. (I don’t think they have cash over cap, which would put extra money into regular pay.) Delta has profit sharing as well. I think they are somewhat similar with our A Fund & b Fund if you are not “young” because FedEx allows pilot to max the IRS limit, but it is out of their pay. Time value of money may make Delta better if young enough to grow the retirement account.
FedEx Alpa is trying to sell the crew force on freezing the A Fund for a Variable Benifit retirement vehicle. Not worth discussing since it is currently being negotiated so NO ONE KNOWS what it really is yet.
2). FedEx also contributes 8% of income up to IRS limit ($280,000 this year I think) into a B Fund. $280,000 * 8% = $22,400. (goes to 9% in Oct of this year or next, not sure which year)
3). Regular sick account (RSA) of 72 hours a year go into a Disability Sick Account (DSA) if not used. If DSA goes above 686 hours at the end of the year (about year 10 of not being sick...ever
), FedEx will deposit extra sick hours into retirement account at pilots hourly rate. 72 hours * $XXX.XX/hour = $XX,XXX. IF DSA payout exceeds the IRS annual limit ($56,000 under age 50 or $62,000 if 50 or older), it paid out as taxable pay.4). Pilot can contribute $19,000 into 401K. And if IRS annual limit has not been exceeded, FedEx allows after tax contributions upto the annual IRS limit.
5). A Fund is 2% for each year of service up to max of 25 years * high 5 year average (limited to $260,000 by pilot contract). Max pay out is $130,000. Not part of IRS annual limit mentioned above.
Comparing to Delta, they contribute 16% of eligible earnings...upto the IRS limit of $280,000. (I don’t think they have cash over cap, which would put extra money into regular pay.) Delta has profit sharing as well. I think they are somewhat similar with our A Fund & b Fund if you are not “young” because FedEx allows pilot to max the IRS limit, but it is out of their pay. Time value of money may make Delta better if young enough to grow the retirement account.
FedEx Alpa is trying to sell the crew force on freezing the A Fund for a Variable Benifit retirement vehicle. Not worth discussing since it is currently being negotiated so NO ONE KNOWS what it really is yet.
So the A fund and B funds. Are these pension type plans or are do they go into a safe harbor vested retirement vehicle that is not subject to the financial health of the company?
03-28-2019, 05:00 AM
#16
Gets Weekends Off
Joined APC: Feb 2013
Position: CRJ200; FO
Posts: 391
Originally Posted by BoilerUP
A fund = Defined Contribution (traditional) pension
B fund = Defined Benefit plan, ie. company contribution into a brokerage account in your name (what DAL/UAL/SWA/etc. now have).
B fund = Defined Benefit plan, ie. company contribution into a brokerage account in your name (what DAL/UAL/SWA/etc. now have).
03-28-2019, 05:08 AM
#17
Gets Weekends Off
Joined APC: Jun 2010
Posts: 122
This tool will let you put in all your data and tell you how much percentage you can be pulling out of each paycheck, 401K and after tax dollars, to hit the IRS limit at the end of the year without loosing out on any of the FedEx 8%.
https://fedexcontributionmaximizer.com/
https://fedexcontributionmaximizer.com/
03-28-2019, 05:18 AM
#18
Gets Weekends Off
Joined APC: Sep 2006
Posts: 554
Actively saving retirement money is important
More money saved younger is important, but I think the retirement is close enough to not be a factor for targeting a company. It is also significantly better retirement money than regionals or military! Just my opinion.
An example of a FedEx wide body FO at top FO pay.
Company Contributes 401K Match: $500
Company Contributes B Fund: $22,400 (senior FO can make 280K, had a friend make ~240K on 2nd year pay on B777) YMMV
Pilot 401K (ROTH or Traditional): $19,000
TOTAL SO FAR $41,900
Pilot OPTIONAL contribution out of paycheck of after tax 401K (should be ROTH 401K/Roth IRA) money: $14,100
OR
(assuming max DSA payout) DSA Pay out on 31 Dec would be 72 * 222.08 = $15,989.76
Pilot's 31 Jan of the next year pay check, company adds $1,889.76 to pilot's pay since pilot exceeded the IRS Limit.
Delta profit share currently doing well and probable benefits junior pilots ability to save max retirement earlier and easier, I wish FedEx had this.
Delta 16% Retirement contribution is excellent, but retirement money wise is still constrained to IRS Limit. Cash over cap becomes regular pay as I understand it (and not very well!)
FedEx still has A Fund, it's very valuable guarantee retirement but does not ever get cost of living adjustments so value decreases over time.
Out of pocket retirement savings is doable at FedEx on 2nd year pay if you are wise with money and not in serious debt. Much easier every year as seniority and pay increases. Many start 2nd year pay at $178.14/hour and according to the EOY salary thread here pilots can make around 200k.
BTW, the IRS limits are YOUR limit. IF you have a working spouse, their retirement savings are separate from yours and have same 56K limit, but that is in addition to yours.
An example of a FedEx wide body FO at top FO pay.
Company Contributes 401K Match: $500
Company Contributes B Fund: $22,400 (senior FO can make 280K, had a friend make ~240K on 2nd year pay on B777) YMMV
Pilot 401K (ROTH or Traditional): $19,000
TOTAL SO FAR $41,900
Pilot OPTIONAL contribution out of paycheck of after tax 401K (should be ROTH 401K/Roth IRA) money: $14,100
OR
(assuming max DSA payout
) DSA Pay out on 31 Dec would be 72 * 222.08 = $15,989.76Pilot's 31 Jan of the next year pay check, company adds $1,889.76 to pilot's pay since pilot exceeded the IRS Limit.
Delta profit share currently doing well and probable benefits junior pilots ability to save max retirement earlier and easier, I wish FedEx had this.
Delta 16% Retirement contribution is excellent, but retirement money wise is still constrained to IRS Limit. Cash over cap becomes regular pay as I understand it (and not very well!)
FedEx still has A Fund, it's very valuable guarantee retirement but does not ever get cost of living adjustments so value decreases over time.
Out of pocket retirement savings is doable at FedEx on 2nd year pay if you are wise with money and not in serious debt. Much easier every year as seniority and pay increases. Many start 2nd year pay at $178.14/hour and according to the EOY salary thread here pilots can make around 200k.
BTW, the IRS limits are YOUR limit. IF you have a working spouse, their retirement savings are separate from yours and have same 56K limit, but that is in addition to yours.
03-28-2019, 05:23 AM
#20
Permanent Reserve
Joined APC: Aug 2007
Posts: 1,677
Originally Posted by BoilerUP
A fund = Defined Contribution (traditional) pension
B fund = Defined Benefit plan, ie. company contribution into a brokerage account in your name (what DAL/UAL/SWA/etc. now have).
B fund = Defined Benefit plan, ie. company contribution into a brokerage account in your name (what DAL/UAL/SWA/etc. now have).
A fund = traditional pension = defined benefit
B fund = 401K (or company paid % ) = defined contribution
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