If does , IF the plan allows it, I honestly don’t know Id the PRAP does or not..

The union usually puts information out late November / early December for guidiance on retirement planning in the subsequent year, so definitely be on the lookout for that.

It does. I’ve done it just for that reason. Or more correctly put, it did. I have no idea if it still does, but I would assume so.

And lets not forget that ALPA gets a taste as well.

I'm excited for our 18% DC in 2026; compounded with the annual raise, that should make maxing 415(c)(1)(A) limits that much easier.

and let's not forget we taste that because of ALPA

And ALPA is compensated handsomely $5-10k per year per United pilot on average (~17,000 pilots?). Would be nice if that was a deductible work-related expense.

It is….as far as I know union dues have always been a legal deduction.

They aren’t deductible anymore (c 2018).

This is correct federally, although some states will let you deduct them.

not since the the tax cut and jobs act was passed eliminating a lot of thing as deductions.

The new CBP rules are out, looks interesting. Notably the IRS hasn’t actually approved it yet but we are going to set it up anyway now and then modify as needed later.

The MEC is voting on this LOA in the next two days. My opinion: The LOA is severely slanted towards the most senior and limits how much the company can put into your PRAP (not opinoin). Someone is trying to "preload" the MBCP balance as to drive down initial fees. So basically, all of us will have to pay so those that want the MBCP can have lower ancillary fees. Give that some thought. Text and email your reps accordingly. If they vote against the majority, hold them accountable. I ain't saying how to vote, I'm just saying educate yourself and have your reps work for you.

I don’t think this is true. How is this slanted toward the most senior? I’ve only been here 5 years and plan to take absolute full advantage of this as soon as possible. I think many of our pilots will love this option, old and new.

This sets up rules starting in July 2025. It is very likely by this time the IRS will have made their judgement on our CBP setup. Almost the only outlying difference between ours and Delta’s (and literally dozens of other non-airline businesses) is the option to change our spill from/to the RHA/CBP every year.

Directly from the LOA companion guide:
”Company contributions (including the 17% and Vacation Forfeiture) contributed to the Pilot
Retirement Account Plan (PRAP) will be capped at the PRAP Direct Contribution Limit, which is
determined as IRC 415(c) minus IRC 402(g). For 2025, this limit is $46,500 ($70,000 - $23,500). This
provision is to comply with the IRS Contingent Benefit Rule.”

The interim rule is my concern. Based on the contingent benefit issue. I just don't need to rush this prior to IRS approval. As written, the interim rule limits the ability for me to maximize "my" company contributions. I do not want to spill into the MBCP. After full IRS approval we will get to choose how that spill works, but not with this LOA, as I read it. Respectfully open to being corrected.

Thats not an interim rule. Its a permanent change.

Effective for plan years commencing on or after January 1, 2025, direct employer contributions for each plan year shall be no greater than the dollar limit under Section 415(c) minus the dollar limit under 402(g) (not to include catch-up contributions) or, the corresponding limits under the Puerto Rico tax code, if applicable (“PRAP Direct Contribution Limit”).

I’m trying to follow why you care about this—do you not maximize your personal contributions and make more than 273k?

Why do I care? Generally I minimize my personal contributions and try to maximize the company comps (thereby reducing spill). ALPA puts out a spreadsheet to help you decide how much you want to put in based on your preference.

My issue with this LOA, if I understand it correctly, is that it will prematurely cap what the company can contribute earlier than we've seen in the past. I don't get to choose that difference. It will also spill more in the MBCP earlier. A listen to the "leading edge' podcast from a year ago taught me that the early versions of the MBCP will have higher fees until the overall balance matures. I have no intention of participating in high fee investments. Especially when they are marketed as low return (safe). I just want flexibility for my assets. I see this LOA as limiting that.

You don’t understand it correctly. Even if the fees are slightly higher, the tax advantage is still greater than PRAP cash. Long term this is a way better asset to put spill cash into than the RHA (you don’t control and it goes away when you die).

This is not some attempt to benefit the high earners at the expense of the little guy, it’s a way to start the program without running afoul of IRS rules while we wait on the final implementation.

I appreciate that, but I "think" I do understand it for my situation. Don't want more money going to the MBCP, I'll take PRAP cash, even at a higher tax rate. Everyone's tax issue is there's. I avoid high cost investments and have many other investments that require capital investment (RE, farmland, cattle).

So, again, this LOA ties the hands of pilots who want to use their cash in different ways. And, as stated earlier, that part isn't interim. It will be long term. This is a play by someone, I just can't figure out exactly who. Under the old system, if you want to spill more you can, your choice. Under the new system, not so much. I like choice.

I don’t think it’s a”play” by anyone. As I read it, they are implementing it this way to comply with an IRS rule they expect they’ll have to comply with anyway. I’m not totally confident on that analysis though. I’m glad they are putting it out for a vote and putting out pro and con letters.

Wouldn't it have been better to wait and get a definitive answer to that before potentially railroading something through that, at best, doesn't alter the status quo and at worst considerably reduces the options a pilot has to make decisions for themselves and takes away control over more dollars in their retirement?

I'm just not understanding what the rush is and who it benefits. I'd rather take the time and make sure it's done correctly than do something just for the sake of getting it done.

Use the RHA calculator to minimize spill? No more with this LOA. The 2025 401(a)(17) is effectively reduced from 350 to 273.5 with 46.5 cap. If you previously minimized spill, loa would reduce take home pay in under to reach 415c limit starting in 2025.
Appreciate negotiating committee looking for solutions to the old RHA limitations. Active rha was a good step. Mbcbp was another good step. However don’t agree with loa implementation and eliminating option to minimize spill. Let’s get IRS approval first before making the CBP rules.

This is my thought pattern as well.

This is pure speculation, but it’s probably because they are fairly certain that rule will apply, but if they don’t implement it starting in Jan they won’t be able to implement the CBP until 2026.
I’m mostly just playing devil’s advocate. I’m not particularly animated by this in either direction.
It’ll have a fairly minor positive effect for some, and a fairly minor negative effect for others. It’ll have next to 0 effect on me 🤷

If the IRS doesn’t approve this, what do we get in return from the company? I’m assuming we gave up negotiating capital for this and I’m also assuming we get nothing if it fails?

From the LOA:
“In the event the IRS does not approve the CBP and all parties hereto agree there is no longer a reasonable ability to receive approval of the CBP, the Company and Association shall, within a reasonable time, discuss unwinding the provisions of this LOA. In addition, any amounts in the CBP will be redirected with respect to each Pilot as determined by ALPA, subject to applicable law and the Company’s ability to reasonably administer.”

Pretty weak language if you ask me.

Harumph! I want choice, not a fund with 70% bonds.

Everybody wants their cake and to eat it too. The CBP by its definition in our UPA is literally ANOTHER choice from what we currently have (RHA only). It is the only way to get PRAP spill into our names and part of our estate. BTW, the “conservative” funds the RHA portfolio are in have returned 11.52% for me this year…

The IRS rule is what stipulates that the company contributions cannot be more than the total allowed (70,000) minus our pre-tax contribution (23,500). It has nothing to do with the LOA, it is an IRS rule for CBPs. As mentioned above, these are typically only allowed to go into effect on 1 January, so unless we want to wait until 2026 we need to lay the foundation now. Our UPA states it will be done in 2025, ALPA and the company have come up with a way forward to meet our contract while acknowledging we are beholden to the IRS.

My beef is being forced into a fund that is 30% equities. Not sure what that has to do with the returns for the RHA you posted, because you ain’t gonna be getting double digit returns with the CBP fund.

The CBP option seems too advantageous on the whole to let it push out to 2026 IMO. Mostly because most of us are probably trying to maximize those savings in the first place. For the sky is falling crowd, this puts you in conservative funds until the world's economies inevitably collapse at which point you can take that protected cash and push it into your PRAP to buy NVDA or dinars if that's your thing for $1 a pop.

Delta pilots have the choice of taking cash when they hit the IRS limits. Why didn't we get that choice?

It's rather disappointing that we negotiated to get an MBCBP equal or better than DL and instead it seems like we're getting forced into a PRAP contribution reduction. Looking like a no vote from me.

Where's it say that? What I see is 22-B-2:

"The Company shall establish a new market-based cash balance plan for Pilots (the “MBCBP”) that is acceptable to the Company and the Association, as soon as reasonably practicable after receiving a favorable determination letter ruling from the IRS, but no earlier than January 1, 2024."

Haven't decided how I'm voting yet, but we aren't contractually obligated to rush into anything.

This is an IRS rule that limits employees with both a 401k and CBP. A Delta guy would need to answer this for sure but I’m guessing any employee that falls into this category would be limited the same way. The final product will absolutely be better if we can swap spill into either account every year.

Thanks for pointing this out. Maybe it was one of the explainer briefs the retirement committee did during the road shows last year that put it out there.

Not in our UPA, no idea.

I have a conservative “safe” fund at Betterment with 35% stocks that has better returns then the RHA this year. It won’t be like that in the long term but this year everyone is a Wall Street genius.

The Delta CBP (MBCBP) had a 1 time opt out period in July of 23. Plan started October of 23. All new hires since inception of the plan are in the plan. Optionally currently does NOT exist. You are in or you were eligible to go out. We do not utilize a RHA. The company DC money hits the 401k first and once hitting 415c or 401a17 the “spill” goes to the MBCBP. For 2025 the company can contribute $59.5k (17% x $350k) and it’s up to the pilot to utilize the 402g contribution limit and/or 401A (after tax contribution) to get more dollars in. The 414 limits (catch up contributions) are still separate than any company contributions. Our 60/40 (equity/fixed income) allocation is up double digits so far this year on performance. We do allow in-service withdrawals once a year to those 59.5YO+ so those pilots can take the money and roll it into a qualified account (IRA or back into the 401K) and invest it themselves. Not getting involved in the UA stuff, but that’s the Delta plan for those asking.

I was told your fund mirrors the LIRIX. How is it up double digits YTD? The LIRIX is up 7% YTD. S&P is 25% since we are talking returns.