I'm assuming you mean RHA & not AHRA, since you likely wouldn't have an AHRA and Tricare. The RHA can be used to pay premiums after you retire from United, though.

 

Time value of money is important. The other consideration is designating your contributions as post-tax. There are other strategies (back door conversion) to put money into the post tax bucket but maxing out your contributions increases the percentage of the whole that is post tax and is the easiest way to start building that pile. 23000/70000 per year or so.

There are too many variables in the pre or post tax calculation to definitively recommend one or the other. I prefer it primarily to avoid minimum distributions which will both reduce your principal balance and increase your tax liability in retirement.

 

The Tricare supplement qualifies as a UA med plan, thus an AHRA.

I don't do it, but pretty sure the answer is yes.

 

The R&I committee has put out many updates/examples on this. They have an excel document where you can fill in the numbers to see exactly what your spill would be.

 

how much is the Tricare supplement? I need to call and get some details on it.

 

128/month me and wife

 

do you feel like typing up the benefits of it? I had someone mention it once, but I’m just not sure about its value, I guess?

 

just put the $128/mo into the FSA… unless you have family members with lots of med issues it’s really not necessary IMO.

 

Couple things, here we go.

1. RHA is triple tax-advantaged, but you must use the money for medical purposes in retirement (the list for legal uses is pretty robust). The RHA is an important medical backstop, whether you’re lucky enough to have Tricare like me or not. Even with Tricare, $100-200k in an RHA might be a prudent idea. However, the RHA is NOT part of your estate, so when you and your eligible beneficiaries pass away, the balance goes back into the trust and NOT paid to your heirs.

2. The company must put their 17% into your 401k until it’s full ($70k). When it’s full there are a few spillage options, one being the RHA, another will soon be the MBCBP. The Cash Balance Plan will be invested similarly to the RHA in mostly conservative accounts and is available to move into your 401k or an IRA when you turn 59 1/2 including while still working for UAL. If you choose to leave it there (I don’t recommend this) and you pass away, the MBCBP is still part of your estate, and WILL pass to your heirs.

3. If you want to maximize your tax advantaged investment opportunities, utilizing the RHA and MBCBP is an integral part of that strategy. You cannot put your money directly into either, it has to come from the 17% the company adds to our paycheck. To do this, quickly front loading the PRAP is crucial.

For what it’s worth, here’s my technique to get money where I want it, yes this takes some planning and full disclosure is much easier as a USAF retiree.

1. Beef up your bank accounts Oct-Dec to cover the bills Jan-Mar.
2. Your Dec paycheck pays out in Jan (into the 401k).
3. Set your 401k to pre- and post-tax contributions as 100% of your pay. Also, make sure to set up the auto-conversion to Roth, which happens immediately when any post-tax money hits your account.
4. When we get the Profit Sharing email in February, set it to go 100% to your 401k.
5. Work your ass off Dec-Feb, depending on your seniority you should be close to $70k and start being paid again in March.
6. Your spillage will go to the RHA until we get the MBCBP option, do the research for what makes sense for you and choose wisely.

 

can you explain what you mean by setting it to 100% pre and post tax? How can you have 200%? Or am I not reading what you mean correctly?