Tread carefully. MoP and Halfwing are going to accuse you of being too negative and will follow it up with quotes they've read in updates.

 

Aww thanks for thinking of me. Happy holidays brother.

 

It's been a while. Happy Holidays to you too, bro.

 

Can you explain what you mean by this? Each pilot already gets a retirement contribution deposited every two weeks (1st/16th...or appropriate business day if a weekend/holiday). It belongs to the pilot in his/her own account. I'm not giving the company the opportunity to hang on to my rightfully earned money for four deposits a year. Not to mention the idea of dollar-cost averaging.

 

Ok. Your correct, make the contribution biweekly. What I meant to say was that we should be getting the maximum allowed per yearly IRS limit ($60K this year for us old guys) for every pilot, from their first month of employment.

The FNG's that are young need to start getting their retirement contributions maxed out from day1. Not wait until they make $260K.

We waste to much energy negotiating and administering a (16)% contribution. The company needs to just pay in the max from day1.

Keep it simple, make it right!

 

Forgive me for being obtuse, but what do you mean by this??? Who waits to contribute and for what reason? What is the 260K value from?

 

I don't think there is any negotiating precedent for that. I am not sure any company in the USA does this.

The career is end-loaded or back-loaded. Our system is a 12 year contract. So, theoretically, one could "max out" at the 12 year mark.

We don't really get to realize our full potential, economically speaking until we get senior enough to enjoy the best routes, the best schedules, on the highest paying airplanes.

I don't see any short-cut to that process.....

The 16% number is a pretty good number.

I think a good way to do this is simply "means test" what a new hire would get today using the 16% number and see if he/she would end up short by age 65. My goal is to retire at 65 with 2.2 million. A new hire today may want upwards of 3 million. However, the real magic to saving is starting young. Some folks depending on weather or not they have other sources of revenue, or depending on what they did before UAL may want to contribute more, or less to their 401K, Roth, etc.

I am not an expert on R/I, but what we are doing right now, I feel is great. I don't think the negotiating leverage exists to do more on the Retirement front. I suppose allot of it depends on the IRS limits and one's age.

 

Employer Contributions
United will make a contribution equal to 16% of your eligible
compensation each pay period. This company contribution will
be split into two contributions: 9% will go to the B-Plan source;
7% will go to the C-Plan source.
Another limit determines the combined maximum employee
and employer contributions that can be made to your PRAP
account each year; in 2017, that limit is $54,000 (or 100% of
your compensation if less) [415 limit].
The 415 limit applies to your combined pre-tax contributions,
Roth 401(k) contributions, post-tax contributions and any
company contributions made on your behalf to the PRAP. Any
“catch-up” contributions you make do not count towards the
415 limit.
The IRS also limits the amount of annual compensation that
may be taken into account for the PRAP. The limit for 2017
is $270,000. Any compensation over this amount cannot be
deferred into a qualified plan such as the PRAP.
Rollover contributions made into the PRAP are not subject to
any of these limits.
Important.

Until the Employee Makes $270K per year the 16% doesn't let them max out to the IRS limit. If I was in this position I would negotiate for the company to max out the B/C plan contribution every year from my first year to build my retirement savings early. Even if it required a few less $ per hour in pay (the IRS is going to get a large chunk of it anyway.)

 

Explaining Compound Interest | Money

As yak explained, it’s nearly impossible for most FOs to hit the $270k income threshold required for the 16% contribution to hit the IRS annual limit.

The system is a catch-22. You need the max contribution as early as possible to get the compound interest ball rolling. The irony is you don’t typically get there until later on. For the furlough guys and more so the double furloughs it’s huge. Getting furloughed for a year or three with 25 years left, and $300-500k in your retirement is orders of magnitude more recoverable than only having $70-100k in there when you hit the street awaiting recall.

 

I'm no expert either so I write this to clarify for myself and prompt corrections to my understanding of the issue. I think....

The $270k restriction is a separate calculation from the 403b limit. If you max out your 401k at $18k then $38k is left to reach the $54k 403b limit. At $237,500 the 16% will get you that $38k. So the 403b can be maxed out well before $270k.

The $270k is like a rich person restriction. Congress figured if you make this much you don’t need a tax break on company contributions. For example, if you put zero in your 401k, at $270k the 16% would be $43,200, well below the $54k limit, but the company contributions to PRAP have to stop anyway. You can continue to put 401k money in, even after $270, because this isn’t company money.

In either case, once either limit is reached, the 16% goes to the RHA. It’s allowed because this pretax contribution is not to an individual but to a fund from which the individual cannot take a cash distribution and is not inheritable as part of an individual’s estate.