According to ALPA, the company will not entertain a plan without the provision.

 

But why? How can it be that Delta’s CBP isn’t impacted by that rule but it’s a total dealbreaker for United?

In any case, 22-B-2 says the company shall establish a CBP that’s acceptable to both the company and ALPA. I’m willing to wait for something I find acceptable.

 

I agree. Not sure why. But that’s what I was told.

 

Willing to wait

aw needs her tax vehicle asap

i like my prap contribution thank you

#13000dollarsisalotforhervehicle

 

WTF. I can't believe I'm saying this. But for possibly the first time in my life I'm agreeing with you (on these parts) lol

 

To be honest there was very little in the PRO stance other than "bro just do it we will fix it eventually". CON letter made a very clear and enumerated case for why this is a bad deal for pretty much everybody.

 

Reportedly only 40% of UA pilots take an active role in their company retirement (60% don't contribute at least $10500 to maximize yearly PRAP), some thoughts using under 50 numbers:

Delta was Cash over Cap prior to their last contract. This resulted in more take home pay, the ability to perform a Mega Back Door Roth, and probably more current year taxes than UA pilots because of the triple tax advantaged RHA. Delta is now CBP except for those that opted out during the transition. Delta did not attempt to have optionality of RHA, CBP, and/or Cash over Cap, therefore in setting up the CBP there was no possibilty of a contingent benefit and thus no restriction.

The RHA is not part of the pilot estate, is less useful to military pilots, and is harder to minimize spill as wages increased in 2016 and 2023. Any unused RHA is distributed back amongst remaining UA pilots if the pilot and their spouse die with no dependents under the age of 26. AHRA was implemented to minimize the amount of spillage into the RHA. The LOA will suspend the sweep. This would allow that additional monies to be used for insurance premiums and health care costs. IMO, the IRS won't allow the optionality that the R&I committee wants and UA will have the same opt in/out as Delta. Also once the IRS determination letter is received in the next couple of years, there will be no contingency issue.

PRAP Cash was implemented for the transition to CBP to not exacerbate RHA spillage from increased contract wages. It was not meant to be permanent as it is not a solution to the "problem" of maximizing tax sheltered retirement funds (a problem Delta spent at least 3 years solving with the CBP). PRAP Cash only starts after at least 10K RHA spillage (403800 earnings). A pilot with 20K PRAP Cash (~520000 earnings) would take home 13600 in the 32% bracket. With the LOA, that 30K would now be in the pilots estate and protected from current year income taxes.

The LOA, besides suspending the sweep, will now allow for a practical Mega Back Door Roth at UA for the first time since Contract 2012. Those currently making Roth personal contributions (~24% tax bracket and lower) could now shelter up to 70000 in the Roth 401K (PRAP 23.5K Roth and 46.5K Post Tax automatically converted by Schwab {minus employer contribution timing}). Those in a higher tax bracket could now shelter 23500 pre tax and up to 46500 Roth (minus employer contribution timing) with all spillage remaining in the pilots estate. The ability to shelter so much savings via Roth without inflating the RHA might increase the percentage of pilots actively participating in their company PRAP retirement plan as it's alot higher than the 7K you can currently save in a Roth IRA.

CBP spillage at retirement or anytime after 59 1/2, could be transferred to an IRA and then converted to Roth at 66 years old or when yearly income is lower. 100K could be converted around the 12% bracket currently, 200K at 22%. CBP is guaranteed to not be lower at retirement and therefore the investment vehicle will remain conservative allowing investment risk to increase in other areas of a pilots retirement portfolio.

 

[QUOTE=Simple Minded;3856039]Reportedly only 40% of UA pilots take an active role in their company retirement (60% don't contribute at least $10500 to maximize yearly PRAP), some thoughts using under 50 numbers:
PRAP Cash was implemented for the transition to CBP to not exacerbate RHA spillage from increased contract wages. It was not meant to be permanent as it is not a solution to the "problem" of maximizing tax sheltered retirement funds (a problem Delta spent at least 3 years solving with the CBP). PRAP Cash only starts after at least 10K RHA spillage (403800 earnings). A pilot with 20K PRAP Cash (~520000 earnings) would take home 13600 in the 32% bracket. With the LOA, that 30K would now be in the pilots estate and protected from current year income taxes.


Good Points on the PRAP!!!

In Unity...

 

I won't quote your entire post, but you just skip over the fact that most pilots will have to contribute more of their own money to max out there PRAP, making it more difficult to effecitively utilize the other buckets that you mention. Some won't be finiancially able to max out their PRAP due to present and past circumstances. I'm happy to hear that it sounds like youre fortunate enough to fully take advantage of ALL of the provisions that this LOA has to offer, but a majority of our pilots won't be able to. And that's what matters. Many pilots are still trying to work on getting their RHA balance up. Sounds like you're under the assumption that most pilots have been able to max out their PRAP, currently hold a simialr amount of money in their RHA as you, and possibly have access to Tricare. That is not the case.

 

That’s basically the conclusion that I’ve come to: this LOA is a good deal for WB CAs and/or those in their late 50s or older. But it’s not a good deal for the majority of our pilots.