2022 Limits - IRC § 415(b)(1)(A)
11-08-2021 | 03:52 PM
#1
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Organizational Learning
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From: Directly behind the combiner
2022 Limits - IRC § 415(b)(1)(A)
Just gonna drop this right here ... That's Internal Revenue Code, and § 415(b)(1)(A) is the Defined benefit plan limit.
2021 limit, the subject of many discussions, is $230,000
The 2022 limit, as announced on Nov 4, will be ...
<drum roll please>
$245,000
.
2021 limit, the subject of many discussions, is $230,000
The 2022 limit, as announced on Nov 4, will be ...
<drum roll please>
$245,000
.
How many pancakes does that equal?
11-09-2021 | 01:01 PM
#4
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From the MEC FastRead sent out today -
“Our goal in negotiations is to enhance the retirement benefits for all pilots in order to provide an appropriate retirement income replacement ratio. Achieving a 70% retirement income replacement ratio using only the Company funded portion of our employee-sponsored retirement plans (Defined Benefit and Defined Contribution Plans), will provide sufficient retirement income with the addition of Social Security and the pilot’s personal savings.”
The email mentions several times that a typical WB CA earns $350,000. Doing simple math $350,000 x 70% = $245,000 which as mentioned above is the IRS limit for 2022. This is the first time they have stated what they are seeking in negotiations for retirement benefits. It appears that is the goal for the A plan and with new negotiated pay rates the B plan will hopefully cover the difference for earnings above $350,000 to reach 70%.
“Our goal in negotiations is to enhance the retirement benefits for all pilots in order to provide an appropriate retirement income replacement ratio. Achieving a 70% retirement income replacement ratio using only the Company funded portion of our employee-sponsored retirement plans (Defined Benefit and Defined Contribution Plans), will provide sufficient retirement income with the addition of Social Security and the pilot’s personal savings.”
The email mentions several times that a typical WB CA earns $350,000. Doing simple math $350,000 x 70% = $245,000 which as mentioned above is the IRS limit for 2022. This is the first time they have stated what they are seeking in negotiations for retirement benefits. It appears that is the goal for the A plan and with new negotiated pay rates the B plan will hopefully cover the difference for earnings above $350,000 to reach 70%.
11-09-2021 | 02:49 PM
#5
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Dude, I know people who saw you at the rally Sunday. The rally where we were asked to not use social media to negotiate. Way to keep negotiating in public! Semper I, Tony's team of 1.
11-09-2021 | 03:11 PM
#6
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From: Socket Drawer
11-09-2021 | 03:37 PM
#7
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11-09-2021 | 09:03 PM
#8
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From: Directly behind the combiner
Second, that number is not negotiating in public. It's the IRS's number. It's available to the public. And it's last week's news.
If you object to that number, what's your opinion of the numbers published in today's FDX MEC Fastread: Retirement Income Replacement #3? I saw $350,000 for a hypothetical WB Captain retiring today, and I saw $670,000 for a hypothetical WB Captain in 25 years. Oh my goodness, did we just give away our bargaining strategy for pay rates for the next 25 years?!?!? We're DOOMED!
I also think we're short-changing ourselves by only shooting for a 70% retirement income replacement, but that's what the FastRead says will be "sufficient."
So, who's negotiating in public?
.
11-09-2021 | 09:30 PM
#9
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From: Directly behind the combiner
The first is an IRS limit. The § 415(b)(1)(A) Defined benefit plan limit, or "Dollar Limit" is the maximum amount that a retiree may receive, BY LAW, from a Defined Benefit plan. We have no control over that limit. It can change from year to year. Since the establishment of our Defined Benefit Plan, the IRS Dollar Limit has not always increased every year, but it has never gone down.
The second number is a Collective Bargaining Agreement (CBA) limit, the Final Average Earnings (FAE) Cap, and it is applied BY CONTRACT. It is a number that was agreed to in our first CBA, and it has not changed because we have not agreed to change it. It is negotiable, like any other part of our contract. This number applies to the CBA Formula we use to calculate the pension benefit. A pilot takes the "High 5" of his earnings (average of the highest 5 years of pay) and multiplies that times 2% times the number of years of service, with a maximum of 25 years of service. 25 years of 2% gets that pilot a maximum of 50% of his "High Five" Final Average Earnings. That's where the FAE Cap comes in to play because it limits, BY CONTRACT, the "High Five" to which the 50% is applied. If the actual "High Five" is $350,000, the pilot can only receive 50% of the FAE Cap, which is currently $260,000. That results in a retirement income of $130,000, which is what the IRS Dollar Limit was almost 24 years ago.
In 1998 and1999, the IRS dollar limit was $130,000, and the FAE Cap was $260,000. Applying the CBA formula, a pilot could get 50% of $260,000, which was exactly equal to the IRS dollar limit. This was not a coincidence -- it was the design.
In 2021, the IRS dollar limit is $230,000.
In 2022, the IRS dollar limit will be $245,000.
Hope that helps.
.
11-10-2021 | 07:33 PM
#10
Contract 2021
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