points to note:

1. it’s a mirror in composition of asset class and exposure.
2. LIRKX is the closest tracking ticker
3. Add yield plus return
4. since inception of our plan we are up over 13% within the plan.
5. Each pilot will have different notational returns within the trust due to different entry points. (Ex- a guy who started MBCBP deposits in March will have a different total return compared to someone who doesn’t start spilling until August.

So Delta does not limit company contributions to the 401k. United loa 2025 dc limit 46.5 and Delta dc limit 59.5. United with an unapproved CBP plan is affected by IRS Contingent Benefit Rule but Delta with an approved plan is not. Hmm

If the Delta plan doesn’t have a similar provision to satiate the contingent benefit rule, I certainly would need a reason from ALPA as to why we need one before voting yes on this.

They should have lead with a comparison between to the two plans since we already know what is possible.

The LOA and the accompanying guide also do not delve deep enough into the administration of the plan. In-service withdrawals-how often? Portability—if you leave before age 59.5, the IRS allows you to roll a CBP into an IRA. Is that allowed here? Plan administrator? This is basic stuff.

Agreed, great questions I’d also like answered. I think the PDR tab opens on Monday, hopefully there’s a scrolling list of questions and answers on the site so we can all get updated.

The company is irrationally terrified the IRS will have a problem with the Delta Plan and said this is the best they could do. For some reason this got put before MEC and it passed to the pilot group.

Go read the Contingent Benefit Rule at https://www.irs.gov/pub/irs-drop/rr-08-40.pdf. It prohibits the employer from incitivizing one retirement/benefit plan over another in a meaningful way. By limiting the amount of direct contribution in to the PRAP, the company is going beyond giving an incentive, and is forcing me to funnel more cash in to the PRAP. I am not smart enough to know why the company is actually doing this, but I am positive this isn't good for the pilot group.

Read LEC 33 Vice Chair update. Excellent summary of why this thing is a dud. Should never have got out of MEC.

I understand the rule. Why in their interpretation of the rule, it requires a limitation to us and not Delta is a question that should be answered.


Seems like they have really missed the mark by not copying an industry precedent.

No mention of Delta's (approved) CBP without PRAP contribution limits.

Good intentions, poor implementation.

Nope.

Exactly. The minute I heard theirs did not have a similar limit, it was a YGTBSM moment. Here is the Council 33 VC's summary on it for those not looking it up:

https://www.alpa.org/ual/-/media/UAL...-loa-24-05.pdf

I would balance that with a read of the LEC 33 Chair message last night. I'll keep reviewing things before I vote but it seems 1) not clear that we have leverage to get anything we want and 2) no matter what the decision is there will be zero change in actual dollars from the company. What does change is where the cash goes. For me, shoving a decent chunk of additional cash into a CBP that can be rolled into other retirement accounts down the road is a big plus as I'm already trying to max what I can. For others the company limiting what they contribute to the PRAP (forcing pilot contribution) is an issue. Either way it's the same amount of money from the company.

When and where have I heard that before? Not directed at you, Chuck D.

Hey prove me wrong. That would be nice. But I'd sure like to have this option for 2025. Again zero difference in total dollars from the company.

But difference in wallet size for 60% of the pilot group apparently.

The money is the same, but how it grows now depends on us funding more of our own retirement. Delta as I far as I can tell does not have this problem.

Lump that in with waiver of company liability and I am willing to wait to get this right. There are permenant and temporary changes to the contract in this LOA that aren't worth an immediate tax shelter in July.

No difference in total dollars from the company, but a considerable difference in the interest those dollars earn. To the tune of hundreds of thousands of dollars over a career.

Not worth it just to have something in place now. We wait and do it right once we have a determination from the IRS.

Whats the 60% figure from? How many pilots seriously put nothing in their 401k? Serious question, I’d be surprised if most of us don’t put in something of their own.

I am putting faith in what C33 said. Whether that is true or not, I have no idea. The problem with those numbers are that it's probably averaged out accross the SL, making it so that only a small group of people probably would benefit from the way they have the plan structured at the moment. 100% of those over those over 59.5 would, however.

The biggest takeaway from the memo is this:

"Finally, this United proposed cap does not exist at Delta Airlines, which is the only otherpilot group with a MBCBP. Why would we expect to face a problem here at United whenthe IRS did not raise any such concerns (about the Contingent Benefi t Rule) with the DeltaMBCBP? If the company has concerns regarding this issue, then they should beaddressed as a PRAP problem, not be brought into consideration in the MBCBP."

Duh.

He sounds pretty spot on. I don’t like the way they worked this LOA.

At first I thought this was a good deal.

It's 30k in tax savings yearly for the way we run our finances and yes, more money would be routed to a money market in this plan, we'd just increase the stock vs. bond %'s in my normal account to compensate, but I'm interested to hear why the Delta pilots get a bigger chunk than the 46,500. Is it because they were offered a one time option to get out of the plan entirely? They were likely aware of the contingent benefit rule as well?

As far as LEC 33's V Chair saying only 40% of our pilot contribute the max to their 401k. Well, sure -- I had to limit my 401k on purpose to maximize the companies contributions. It's not because we're not wanting to invest up to the max or being lazy.

Anything we leave out now will be negotiating capital later for company. The Monday letters for and against will be interesting.

Our plan still allows IRA rollovers into the plan. Did it last month.

I'm voting no primarly because this suspends my ability to fund the active HRA until the IRS determination letter. For someone that has kids, or goes through any medical event for the year, this program is huge.

I don't understand the need to rush this. Yes, the VEBA RHA is a problem because it can be overfunded and isn't a willable asset. That does need to change, but why are we rushing it. Do it right the first time, even if it takes a little longer.

100% Agree. I'm not 59 years old, I choose to invest more aggressively. But with this new LOA, I do not have a choice where those additional funds are directed.

SPOT ON!

In Unity...

I'm a no on this as well. Quick back of the napkin math says over 25 years the difference between the amount the company is not contributing to the PRAP and instead putting into the MBCBP will be over $700,000. The MBCBP is too conservatively invested for serious growth. I understand the reason for it and it certainly serves a purpose. But this is not the way.

It's a great deal for old farts like me as we can put it all to work at 59.5 by sweeping it in our PRAP but I'm a hard no because of the gives. Forcing me to use my money to fill the PRAP? Um why did we get 17/18% B/C fund when I'm still going to have to put my own max money into it? I'll lose the option of funding the RHA (tax free retirement money) for 2-3 years at least according to the Podcast. The 2024 AHRA money will not be swept in January either which means it's sitting in a money market for 2-3 years earning nothing. At least the RHA made 8.5% this year and is tax free when I pull it. The UPA that we voted in says the company will do it and they even came up with a plan for the people who feel they've overfunded it by maxing the amount of spill to $10k and then it's paid cash. So now they're catering to them even further? The same ones pushing to pad their retirement by 2 more years as WB CAs? Hard pass.

Whether it’s now or in a year or two, we will get the CBP as an option instead of the RHA. As I’m all for this as an option to dump money into pretax, I feel like we should be focusing on what we want to actually change. Top things for me:

1. Less conservative investment, perhaps 50/50 or even 60/40 stock/bond portfolio.
2. Cash over cap option.
3. No PRAP company limits.

Yeah. Didn't even consider the fact that you can roll over into the PRAP at 59.5. So fair that it's great for older people. But you're point on the B/C fund drives to heart of my point. Why have the company DC 17/18% yet we still need to contribute $23,500? No way.

Compleetely agree with the above. It'll be an uphill battle on number 1 though when we've already agreed to 30%. My gut says it'll have to be next contract. I just don't like gives in order to rush this thing in before it's IRS approved when DAL has an IRS approved one without the gives this LOA proposes.

The UPA spells out approximately 30% equities.

22-B-2-c-(1) Except as set forth in Section 22-B-2-c-(2), a Company appointed investment
fiduciary will target an equity allocation of thirty percent (30%)

I agree it's overly conservative but it's what we've agreed to. It's something to work on probably next contract.

Number 2 seems like it could be a negotiated option, but 1 & 3 seem like a pretty hard sell to get from the company.
The CBP has to stay in the black or else the company is on the hook, so I’m sure they see it as significant risk to invest it in anything but the most conservative vehicles.
As for the PRAP limit, the company thinks they are just complying with an IRS rule. I don’t read it the same as they do, but my tax expertise accrues from handing some docs to my CPA once a year and occasionally staying at a Holiday Inn Express. I have to accept that UAL might have some lawyers who understand this better than I do. I don’t really see what incentive they’d have to invent this problem.

Meanwhile all we have to do it point to DAL's IRS approved plan that does not restrict company contributions. I'm not buying the excuse. I do think the company wants to limit their exposure for potentially having to plus up if the plan loses money. I think the company probably said if you want this before it's approved you have to give up our exposure. So ALPA blinked.

Whether you think that or not, the company will not approve a CBP without the limits in the LOA. If this gets voted down, more concrete terms for the CBP will definitely be something to negotiate in the next UPA. It looks like we just weren’t explicit enough as to what we wanted. Not sure if Delta was, but we definitely were not.

From my understanding, there is no “wait & see if the IRS will approve something else option,” so if that’s your top issue (it’s mine). The CBP will likely be off the table this cycle.

It's just one of many issues I have with the rush job. It's not even affecting me as much as my FOs who now have to chose between funding their PRAP or using the $13,000 per year to maybe fund their kids 529 or paying down their mortgage, putting the money somewhere earning 10% in a brokerage account that they'll only pay 15% capital gains tax on, etc etc. The screwing over of the RHA for 2-3 years is another. Call me crazy but I believed ALPA when they told us in the roadshows for this contract that our MBCBP will be "just like DAL has". Well it's absolutely not in this LOA.

I'd personally prefer to get it right the first time vs all the permanent gives in this LOA.

But we all have a vote.

I just hit PRAP Cash spill this year. Good problem to have but an annoying one when the CBP could let that sit tax free on the way in then more investable after 59.5. I agree the proposed CBP isn't to everyone's liking and may get punted but I think by the end of this CBA and for however long it takes until the next one there will be a growing number of pilots who are annoyed by how much cash we get from the company's 18% that will take the full tax hit.

And I think you'll be surprised with how much you have in your PRAP at the end of your career. I'm at the point of paying taxes now to do pure ROTH contributions because my PRAP has grown to the point where I'll be in the same tax bracket in retirement that I'm in now. More tax deferred money is actually a PITA. My financial advisor has me minimizing my funding and taking as much cash as possible to limit my tax bill by using a brokerage to pay capital gains at this point because it's less than I'll pay on withdrawals from the PRAP when I retire. Yes first world problems but don't assume tax deferred is some financial panacea. Taxes will always get paid. What the rate is matters. Also does anyone believe taxes won't go up at some point with our astronomical national debt?

Hopefully at some point ALPA can tell us why the company thinks there’s a difference between our plan and Delta’s. They aren’t gaining anything by imposing this rule. They give us the exact same amount of money, it just goes to a different account. Maybe they are being more conservative than we think is reasonable, but if it were 100% cut and dry, why would they be insisting on this? What do they care?

I care because that's money I HAVE to dedicate to the PRAP to make up the difference. The CBP was supposed to give us options on how to manage our retirement. But this LOA takes options away from us. It's forcing money into a CPB that otherwise we'd be able to direct how we wanted it invested. I'm too lazy to do the math but on the other UAL forum someone did and I recall they showed someone hired in their 30s with 25-30 years of locking in an additional $13000 into the CPB with only 30% in equities is losing out on approximately $700,000 in earnings over that time compare to just putting it into an S&P fund/etf. I care because this LOA would lock those of us who planned to utilize maximizing our RHA out during our WB CA years are getting hosed. Who wins? Those who have $300k already in their RHA who don't want more. But that was addressed already by the $10k max that's in place.

If you’re 59.5+ or even close, this is a slam dunk. If you’re farther away, you are probably better off taking the tax hit and just investing it in something with a better return, unless you are a relatively conservative investor. That is a very person-specific calculation, though, so each person would have to run that for themselves.

I'm in that demographic as are my friends. It's a no from me and most of my friends as the RHA stop for 2-3 yrs have hit us hard. We lived through the lost decade as FOs and are just now reaching WB CA so we don't have the recommended $315k RHA accounts. And yes I have tric care

Well, we don’t have the plan details, which is also a shortfall, but in your boat if this passes I would be maxing the contributions to what I can possibly afford, rolling it over to the PRAP or an IRA and converting it to ROTH. Same tax liability if you just had contributed it to a brokerage account as you mentioned, but with no tax in the back end.