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ebuhoner 09-16-2019 07:52 AM

Fedex Retirement Plans
 
Hi all,

I keep hearing everywhere that Fedex and UPS have great retirement plans but Im not really familiar with how it works. All I see in APC Fedex page is $500/yr in 401k, A/B fund 2%/8%. I have always worked in places where they just give you 401k matching, and Im trying to learn more about the details on Fedex retirement.

So what does the $500/yr mean (401k)? What is the difference between A fund and B fund? does fedex offer defined contributions like AA’s 16% into the 401k?

Please excuse my ignorance, Im just trying to gather as much information as possible since Fedex is currently my top choice for my future and I want to understand all the details in case they decide to hire me one day.

Thank you!

BoilerUP 09-16-2019 08:09 AM

Fedex Retirement Plans
 
FDX has basically three retirement plans:

401k, with a max of $500 company match

Defined Contribution “B-Plan” of 8%; basically 8% of your gross earnings (up to the are deposited into a brokerage account in your name up to IRS limits for annual compensation and defined contribution, which includes 401k. Often times referred to as a Money Purchase Pension.

Defined Benefit “A-Plan”; this is a traditional pension. FDX has a benefit of 2% final average earnings (“high 5” of last 10 years I think, not 100% sure) up to their contractual income limit of $260k, with a max years of service of 25 years.

What does this mean?

Lets assume you work 26 years at FDX, and average $320k in your “high 5” years.

Your defined benefit will be 2% of final average earnings (260k contractual limit), which is $5200/year of service. Max YOS toward the defined benefit is 25, so $5200 * 25 = $130k annual defined benefit.

Now lets say you work 18 years, with a “high five” of $240k. 240k * 2% = 4800/YOS * 18 YOS = $86,400 annual defined benefit.

Disclaimer: UPS guy, so hopefully I’m not off on anything. In case you care, we get no 401k match, a 12% defined contribution, and have a 1% FAE or (more lucrative) Flat Dollar Amount Defined Benefit that basically gives retiring Captains $4k per YOS (FOs get 80% CA amount) up to 30YOS. ERISA & IRS requirements make the flat dollar necessary to renew every contract negotiations.

Hope this helps...

howardhughes8 09-16-2019 08:15 AM

Also, I believe Defined Contribution goes to 9% 2020 or 2021?

PolicyWonk 09-16-2019 08:28 AM

11/1/19 is when it goes up a percent.

ebuhoner 09-16-2019 09:02 AM


Originally Posted by BoilerUP (Post 2888169)
FDX has basically three retirement plans:

401k, with a max of $500 company match

Defined Contribution “B-Plan” of 8%; basically 8% of your gross earnings (up to the are deposited into a brokerage account in your name up to IRS limits for annual compensation and defined contribution, which includes 401k. Often times referred to as a Money Purchase Pension.

Defined Benefit “A-Plan”; this is a traditional pension. FDX has a benefit of 2% final average earnings (“high 5” of last 10 years I think, not 100% sure) up to their contractual income limit of $260k, with a max years of service of 25 years.

What does this mean?

Lets assume you work 26 years at FDX, and average $320k in your “high 5” years.

Your defined benefit will be 2% of final average earnings (260k contractual limit), which is $5200/year of service. Max YOS toward the defined benefit is 25, so $5200 * 25 = $130k annual defined benefit.

Now lets say you work 18 years, with a “high five” of $240k. 240k * 2% = 4800/YOS * 18 YOS = $86,400 annual defined benefit.

Disclaimer: UPS guy, so hopefully I’m not off on anything. In case you care, we get no 401k match, a 12% defined contribution, and have a 1% FAE or (more lucrative) Flat Dollar Amount Defined Benefit that basically gives retiring Captains $4k per YOS (FOs get 80% CA amount) up to 30YOS. ERISA & IRS requirements make the flat dollar necessary to renew every contract negotiations.

Hope this helps...

Thank you for the information!

So for the A/B plans, could the company take it away in a financial crisis? I had an AA jumpseater the other day and he told me about how AA took away their pensions a while back. People who had over 2-3 million dollars saved for retirement, all of the sudden, gone. How could something like this happen?

hoya saxa 09-16-2019 09:32 AM


Originally Posted by ebuhoner (Post 2888205)
Thank you for the information!



So for the A/B plans, could the company take it away in a financial crisis? I had an AA jumpseater the other day and he told me about how AA took away their pensions a while back. People who had over 2-3 million dollars saved for retirement, all of the sudden, gone. How could something like this happen?



It couldn’t. Money in your name (401k, defined contributions) are yours and a company can’t touch them. In bankruptcy companies CAN (and have done) void economic sections of contracts such as pensions (defined benefit plans).


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CanWeGetTheLeft 09-16-2019 09:41 AM

Question from an outsider hoping to apply soon, I’ve seen several other threads where it’s stated that many people retire on December 31st. Is that related to the “high five” calculation or something else?

howardhughes8 09-16-2019 10:25 AM


Originally Posted by ebuhoner (Post 2888205)
Thank you for the information!

So for the A/B plans, could the company take it away in a financial crisis? I had an AA jumpseater the other day and he told me about how AA took away their pensions a while back. People who had over 2-3 million dollars saved for retirement, all of the sudden, gone. How could something like this happen?

If Fedex and/or UPS ever declare bankruptcy we all have much bigger problems!! Not full proof by any means, but pretty darn close. All the major pax carriers (except Southwest) went through bankruptcy to start over, clean slate. If did wipe out many people’s pension. Corporate America at it’s best.

Fdxlag2 09-16-2019 11:54 AM


Originally Posted by CanWeGetTheLeft (Post 2888227)
Question from an outsider hoping to apply soon, I’ve seen several other threads where it’s stated that many people retire on December 31st. Is that related to the “high five” calculation or something else?

No. Your years of service is calculated by month. So if I were to retire next week I would have 18 years 10 months or about 37.7% times my high five. the 31 Dec thing is a good deal that expires soon from our last contract, it allowed pilots who committed a year out to get up to 50 cents on the dollar of their sick bank paid out if they jump through enough hoops.

pinseeker 09-16-2019 12:01 PM


Originally Posted by PolicyWonk (Post 2888184)
11/1/19 is when it goes up a percent.

No, January 1, 2020. 28.D.4 in the contract.

CanWeGetTheLeft 09-16-2019 12:36 PM


Originally Posted by Fdxlag2 (Post 2888286)
No. Your years of service is calculated by month. So if I were to retire next week I would have 18 years 10 months or about 37.7% times my high five. the 31 Dec thing is a good deal that expires soon from our last contract, it allowed pilots who committed a year out to get up to 50 cents on the dollar of their sick bank paid out if they jump through enough hoops.

Thanks for that clarification, really appreciate it.

pinseeker 09-16-2019 01:17 PM


Originally Posted by Fdxlag2 (Post 2888286)
No. Your years of service is calculated by month. So if I were to retire next week I would have 18 years 10 months or about 37.7% times my high five. the 31 Dec thing is a good deal that expires soon from our last contract, it allowed pilots who committed a year out to get up to 50 cents on the dollar of their sick bank paid out if they jump through enough hoops.

What is expiring with the sick buy back LAG? I don’t see an end date with that provision of the contract.

KnightFlyer 09-16-2019 02:20 PM


Originally Posted by Fdxlag2 (Post 2888286)
the 31 Dec thing is a good deal that expires soon from our last contract, it allowed pilots who committed a year out to get up to 50 cents on the dollar of their sick bank paid out if they jump through enough hoops.

Not true. All pilots are eligible for the sick bank pay out. Only pilots 54+ @ DOS get the $10k-$40k bonus. All subject to the contract rules.

Fdxlag2 09-16-2019 02:23 PM


Originally Posted by pinseeker (Post 2888327)
What is expiring with the sick buy back LAG? I don’t see an end date with that provision of the contract.

Correct I was thinking of the lump sum bonus part of the plan.

Skytrucker01 09-16-2019 04:17 PM

For the defined benefit plan, Is there any inflation adjustment after retirement similar to the military pension or do you get the flat amount for the rest of your life?

For instance, if you max’ed out at $130K does that stay at $130K every year or does it go up by 1% (or whatever) based on cost of living increases?

I assume it does not.

Thanks!


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123456 09-16-2019 05:07 PM

Don't you also get an extra @$110k if you give them one years notice?

Adlerdriver 09-16-2019 05:32 PM


Originally Posted by 123456 (Post 2888434)
Don't you also get an extra @$110k if you give them one years notice?

There’s way more to it than that to get the full $110k. In addition to the notice, you must:
Make $740k in your final 24 months (none from sick leave)
Retire with a full sick bank
Be at max WB Captain pay

FXLAX 09-16-2019 11:34 PM


Originally Posted by Fdxlag2 (Post 2888286)
No. Your years of service is calculated by month. So if I were to retire next week I would have 18 years 10 months or about 37.7% times my high five. the 31 Dec thing is a good deal that expires soon from our last contract, it allowed pilots who committed a year out to get up to 50 cents on the dollar of their sick bank paid out if they jump through enough hoops.


Are you sure it goes by month? I thought it was calculated starting from July each year and accumulating two months worth for every full month of work. But if you don’t have that by June, then you get no credit.

KnightFlyer 09-17-2019 04:31 AM

Years of service calculated using the fiscal year starting 1 Jun. You have to “work” at least 1000 hours to get a good year. As pilots they calculate it as 95 hours worked for every 2 weeks. It takes 5.5 months to get that for the fiscal year (mid Nov). They also count your vacation time not used when you retire so it can move that back as early as late Aug. However, to earn all of next years vacation you have to stay until Oct 16th. That’s why in the past many retired in late Oct or Nov. The last contract added the 2 incentives to stay until Dec 31st; some do, some don’t.


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FoxHunter 09-17-2019 03:32 PM


Originally Posted by Skytrucker01 (Post 2888404)
For the defined benefit plan, Is there any inflation adjustment after retirement similar to the military pension or do you get the flat amount for the rest of your life?

For instance, if you max’ed out at $130K does that stay at $130K every year or does it go up by 1% (or whatever) based on cost of living increases?

I assume it does not.

Thanks!


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No there is no COL adjustment. The $130,000 max pension only works if you are not married. If you want survivor benefits there is a penalty. When I retired I recall there was a $1300 a month penalty to take the 50% survivor benefit in my case. I had 24 years and my wife was six years younger. The younger the spouse the larger the penalty. Unless the spouse signs away the benefit the 50% option is the only one allowed by law. If the spouse signs away the benefit it can be covered by life insurance. The way I looked at it was the life insurance had to be bought with after tax dollars.

busdriver12 09-18-2019 06:45 PM

Certainly you aren't required to choose survivor benefit. Many people who are married choose not to select the survivor benefit, and get the entire pension. It's not required. You can also delay getting your pension, and it increases accordingly. For example, by delaying receiving your pension for a year, the pension will increase from 130K to approximately 142K per year. Sure wish we had a COLA, though.

Jetjok 09-19-2019 04:11 AM

However, I believe that if you select No Survivor Benefit, your spouse has to sign off on that selection.

JJ

busdriver12 09-19-2019 01:04 PM

I would hope that anyone still married at the point of retirement would be in agreement with their spouse on whether they desire to take the full pension or take a reduced one. Though it can be tough to adequately plan for all scenarios, because who knows when we will die? I think my optimum scenario is to delay a year, take the full pension and go for the 142K. But if my health declines, and something appears to seriously threaten my lifespan, I’ll change my mind, and keep max life insurance also.

KnightFlyer 09-20-2019 09:18 AM

I’ve looked at this a lot too. Getting life insurance instead of joint survivor would require me to get it before 60 and 20 year term. After 60 and/or 25 year term ramps the cost up big time. My wife wasn’t comfortable with life insurance running out when she hits 78 and then no survivorship after that. Schwab financial planner recommended the joint survivor options.

Deferring the pension does raise the benefit nicely but you need to look at the break even point. Deferring a year for me had a break even at just under 9 years.


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Jetjok 09-21-2019 04:54 AM

Although my situation was different than you guys, what I found, when I was ready to retire, was that I could convert my FedEx Group Policy to a Flexible Premium Adjustable Life Insurance Policy, that was offered by Lincoln National Life Insurance Company, a division of Lincoln Financial Group, which at the time was the company providing our FedEx Group life insurance.

I went out on LTD in 2007 and retired in 2012, while still on LTD. I too was wrestling with which retirement "plan" to take, because you only get one shot at making your selection. Once you retire, you're stuck with your selection, forever. I was leaning toward the Joint and Survivor Annuity 50/50 Benefit, but was also considering taking out life insurance, instead, thereby increasing my take home pay from my FedEx monthly retirement checks.

I ended up going with the life insurance policy mentioned above, not because it saved me money, but because the premiums never change, and I am covered by this policy until my 104th birthday. Another important reason I went this way is that when I die, my wife, or my son will get the face amount of my policy, in a lump sum, tax free!

Because I was on LTD at the time I retired, the individual policy was more expensive than if I had gone back to work and retired. I was told that the conversion to an individual policy from the group policy would have cost me approximately the same in monthly payments, as I had been paying while still flying at FedEx.

By the way, this policy is NOT a Term policy, but a form of Whole Life/Universal Life insurance that doesn't accrue any cash value.

Hope this helps or at least stimulates the discussion.

JJ

busdriver12 09-21-2019 08:20 AM

Good information, Jetjok. Now you have me wondering whether that’s the way to go.

Jetjok 09-21-2019 05:49 PM


Originally Posted by busdriver12 (Post 2890975)
Good information, Jetjok. Now you have me wondering whether that’s the way to go.

It's something to check out to see if that option is still available. I'm sure you're not the only one who would like to know if it is.

KenandDeglan 09-22-2019 07:07 AM

The great negotiator chuck dyer will save us all by giving up everything to the company because that is yhe best we can get. Read up on the law suit

Nightflyer 09-22-2019 07:13 AM


Originally Posted by KenandDeglan (Post 2891354)
The great negotiator chuck dyer will save us all by giving up everything to the company because that is yhe best we can get. Read up on the law suit

Lawsuit? What lawsuit?

KenandDeglan 09-22-2019 08:04 AM


Originally Posted by Nightflyer (Post 2891356)
Lawsuit? What lawsuit?

Its an old one during the great chuck dyers idiotic reign. Different opinions on it but I sincerely hope it wakes up our Union to give us the truth and Us as pilots to band together.

Here is the link http://static.politico.com/b1/9b/97ad537a4b44b8d49364de4a2e49/tennessee-union-lawsuit.pdf

JetJocF14 09-30-2019 12:24 AM

[QUOTE=Jetjok;2889701]However, I believe that if you select No Survivor Benefit, your spouse has to sign off on that selection.

That is absolutely correct. If that is the option you chose FedEx will send you a legal form that you AND your wife must sign and have notarized. You both acknowledge that when your pilot spouse dies FedEx is completely done with you. Oh and you can’t give a wink wink saying sure my wife is on board with this. Notarized legal document. Retiring 12-17-2019.

35alpha 10-06-2019 07:36 PM

Is there a minimum retirement age to qualify for the pension?

Reading the contract there seemed to be... or does your pension just start when you turn 60 regardless of when you actually retired, assuming you have the 5 years of vesting?

pinseeker 10-07-2019 02:08 AM


Originally Posted by 35alpha (Post 2899474)
Is there a minimum retirement age to qualify for the pension?

Reading the contract there seemed to be... or does your pension just start when you turn 60 regardless of when you actually retired, assuming you have the 5 years of vesting?


You take a penalty for each year you retire before age 60. If you retire early enough, the penalty could erase the retirement.

KnightFlyer 10-07-2019 04:45 AM


Originally Posted by 35alpha (Post 2899474)
Is there a minimum retirement age to qualify for the pension?

Reading the contract there seemed to be... or does your pension just start when you turn 60 regardless of when you actually retired, assuming you have the 5 years of vesting?

The earliest you can retire is 55 with 5 years of vesting. You can start it at 55. 3% hit per year before age 60. If you have your high five and 20 years of service, at 55 the max retirement is ((20*2%)*$260000)*.85 or $88,400 w/o any joint survivorship. You can defer the start of pension payments to increase the benefit.

Better explanation in the Pilot Benefit Book.

kronan 10-07-2019 05:37 AM

There are benefits to deferring the pension. To include the elimination of the 3% Penalty if you retire prior to 60.

In addition to the increased Pension $$, delaying a year or two allows either withdrawing or converting Traditional IRA\401k $$'s at a lower tax rate.

Whether that's beneficial or not is certainly debatable.
Shoot, if you have enough cash built up, might even allow you to pull some capital gains out of a taxable account at the 0% tax rate.

35alpha 12-15-2019 04:43 PM


Originally Posted by KnightFlyer (Post 2899552)
The earliest you can retire is 55 with 5 years of vesting. You can start it at 55. 3% hit per year before age 60. If you have your high five and 20 years of service, at 55 the max retirement is ((20*2%)*$260000)*.85 or $88,400 w/o any joint survivorship. You can defer the start of pension payments to increase the benefit.

Better explanation in the Pilot Benefit Book.

What if one were to retire at 54.. or 40?

Reading the benefit handbook it appears that one could still defer the retirement payments until 60, but it isn't very clear.

bleedairpacks 12-29-2019 05:26 PM

Envy all you young guns and gents that are lining up their plans to retire. Retired 10 years a go to the day. Best job I ever had in the world. Afforded me seeing the world, spending holidays abroad with my family, paying for all my kids college (both my boys fly AA & WN) and a wonderful retirement. Just keep your head above all the chatter and see the long side of everything in life. Happy New Years to you Purple Warriors.

The Walrus 12-30-2019 02:11 AM

Happy birthday!

FDX1 01-03-2020 10:04 AM


Originally Posted by KenandDeglan (Post 2891376)
Its an old one during the great chuck dyers idiotic reign. Different opinions on it but I sincerely hope it wakes up our Union to give us the truth and Us as pilots to band together.

Here is the link http://static.politico.com/b1/9b/97a...on-lawsuit.pdf

Wow, that's impressive. Sh*7 on a guy that's retired after putting in 30+ years as a FedEx Pilot and volunteered for numerous ALPA Committees. You're a champ calling for "Us as pilots to band together".

Also, no way in the world to tie that frivolous lawsuit to anything when Dyer was MEC Chairman with the retirement work that was done after the 2015 CBA was ratified.

Out of 4500ish pilots they could barely find 4 to put their name on it. Most sniffed it out for what it was...meritless, self-defeating, fantasy-land attempt at the expense of our dues dollars.:rolleyes:

jetlaggy 01-04-2020 03:05 AM


Originally Posted by 35alpha (Post 2939675)
What if one were to retire at 54.. or 40?

Reading the benefit handbook it appears that one could still defer the retirement payments until 60, but it isn't very clear.

I am curious also


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