viperdriver

If you earn 270 260 260 260 250 what is your hi 5? I guess I'm asking if individual years can have more than 260 to make up for less.

MaxKts

As I understand it - yes.

Average of your high five.

The final average is limited to the 260K

Flyinhigh

It depends!! (Don't you hate it when someone says this).If you take a look at The Pilot Benefit Book under the Retirement section, it says: "Annual Eligible Earnings for the Qualified Pension Plan are subject to the limit under Code Section 401(a)(17) (the compensation limit.) So, it depends on what year you earned the money. If you earned $265,000 in 2014, only $260,000 would be used to compute your Average Earnings. The IRS limit in 2015 was $265,000 and I think it is $270,000 for this year. So, yes, you can earn more than $260,000, up to a certain limit, provided it is in the proper year, and have that year's earnings bump your average up to $260,000.

Raptor

I asked that question in the retirement seminar.

Example:
Year 1 $150,000
Year 2 $150,000
Year 3 $150,000
Year 4 $150,000
Year 5 $550,000

You add it up and divide by 5--in this case you get $1,150,000 / 5 = $230,000. Of course, your limit is $260,000 per CBA.

This is why many pilots don't use their vacation the last year and sell it back AND get the value of the vacation earned for the following year. They get a huge last year which can bring up the high 5 if the next highest 4 are below max.

pinseeker

If that were the case, then there isn't a single retired FedEx pilot that had an average high five of $260k since the compensation limit from that table didn't reach $260 until 2014. Before that it was $255k or less. I believe the limit you are looking at is for the B plan. I think the A plan is the Grandfathered limit which is currently $395K.

Flyinhigh

My last year was 2012. The qualified plan limit for that year was $250K. With vacation buy back, etc. my earnings for the year were $262,711.31. In the calculation for my retirement I was credited with $250K for the qualified plan and $262,711.31 for the non-qualified plan. In 2007, the qualified plan limit was $225K. I earned $248,200.05 that year. I was credited with $225K for the qualified plan and $248,200.05 for the non-qualified plan. After some math that I gave up trying to understand, I received a lump sum payment for the non-qualified portion of my earnings and $250K and $225K were used in the computations for my high five.
There are two other ways to compute your pension other than Qualified Plan Average Monthly Pensionable earnings times years of service times 2%. One of them is the Pilot Final Average Earnings Formula which uses credited service before 1999 and credited service after 1999 multiplied by factors found in the charts in the retirement section of the Pilot Benefit Book. This calculation did not change my qualified pension amount.The final way to compute is called the Flat Dollar Formula which uses age/service multipliers and some other factors found in the same charts. This calculation actually lowered my benefit. They take the highest of these three numbers not to exceed the Section 415 limit in force in your retirement year which determines your monthly retirement benefit. Any monthly benefit over the 415 limit up to the $260K company limit is given to you in a lump sum check. My lump sum amount was computed using the interest rates and mortality tables specified by the IRS for calculating lump sums in effect for the plan year ending 5/31/2013(what ever that means.) You used to get the non-qualified difference in your monthly benefit. I think it changed to the lump sum around 2004 (could be wrong on the year). The reason for the change was that if something happened to the pension plan, your qualified portion was protected but the non-qualified portion was not. At least that is how it was explained to me.

MacGuy2

I retired 9 months ago. This is the correct answer. Add up the totals of the highest 5 years. Divide by 5. Max of $260K.

As was noted in a later post, many pilots will try to avoid using their last years vacation and sell it and the following years accrued vacation to add a pretty significant bump on to their last year's income.

MG2

DLax85

Do you recall the assumed mortality age & assumed interest rate in those calculations?

Flyinhigh

The percentages used were !.54%, 4.30%, and 5.14%. I do not know what the assumed mortality age was. The paperwork only said it was from the tables specified by the IRS used for calculating lump sum payments for the plan year in which I retired.

MacGuy2

I may be totally off the path that you guys are taking, but you know that if your average high 5 exceeds the $260K, there will not be an non-qualified part of your pension, regardless of the IRS maximums.

MG2