I’m not sure if you were arguing with me or just quoting me, but I didn’t say PILOTS shouldn’t care. I care where that money goes too. It’s my money. I was saying I don’t think the company would pretend there is a regulatory problem if they didn’t think there was some chance they really see one.

I hate to say it, but you all are arguing over nits. You want a higher return? It's already going to be better than what we have now.

And.....historically......pilots suck at managing money. Usually manage it till its gone!

What I want is options on how to use my money. This LOA seriously restricts them. There's a great con letter out that spells them all out.

It isn't though (at least for those under age 59.5). Under the LOA, I would have to contribute more of my own money to fill the PRAP, and in doing so, I'm forced to spill money into the CBP. That's actually a worse outcome for me than the status quo, which would just be receiving taxable cash or spilling into the RHA instead. I threw together a quick spreadsheet last night, and found that even though I'd take an initial ~30% haircut on taxable cash today, that same money invested into 80-100% equities over the course of my career should yield almost double the final balance of a scenario where my money is forced into the CBP with its 30% equity allocation instead.

Podcast was informative.

The way I see it: if you max out your contributions ($23,500) and if you plan/or expect to AGI less than $273,525. Which like as a narrow body FO in my 2nd year, I LIKE TOTALLY DO.
There is LIKE no benefit whatsoever to me to vote YES.

Where are the con letters, where they sent out to your email, or are the on the MEC page. Where can one find them?
Also.....does Not voting count as a yes vote?

There is a crowd out there that fits the above descriptions with respect to AGI, and don't really know too much about this type of stuff (very understandably I may add) and will simply just not vote.

Pro/Con letters came in an MEC email today for me.

I laughed a little at the PRO letter. You could tell who it was geared to. The two examples they used where $300,000 income and $600,000. I'm sure there are some hustling and making that but can it be that many? I just fly my line and go home. I was just over $500,000k (after profit sharing) as a 30 yr 777 CA.

Can someone confirm that Delta's CBP does not have this but UA's CBP will?

from the UA ALPA LOA 24-05 companion guide:
PRAP Company Contribution Limit Reduced
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.

What is the IRS Contingent Benefit Rule?
The intent of the Contingent Benefit Rule is that a pilot making voluntary pre-tax or Roth contributions could modify the amount of contributions another retirement plan receives. To mitigate this, the PRAP company contribution limit is being reduced to prevent the Contingent Benefit Rule from applying on the interaction of the PRAP and CBP. The Direct Contribution Limit (for 2025: $46,500 of employer contributions) is implemented in the PRAP going forward. Post-Tax contributions are not part of the Contingent Benefit Rule.

Says the senior WB Capt that wants to fill up. Sorry Dave, we’ve had enough of “yeah it’s not Delta’s, but next contract will fix it!”

That is correct (if we vote for this LOA). Why is that the case? Haven't heard a good answer...

Thanks, I just saw the Con email which raises that question.

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.

These must be all the guys I fly with who have boats, RVs, and planes.

Look at the demographics of who’s pushing for a yes vote…..

They all have the same talking points not realizing that this takes away the choice for majority of the pilots here on maximizing their PRAP contributions….

Its all good, already submitted my no vote….

Reading all this, why haven’t we already submitted a plan to the IRS? That’s so frustrating to me.

What is the estimated implementation if we vote no? Seems like we screwed up the implementation language in UPA23.

I am quite surpised that so many of you like 'PRAP Cash.' The fact that it goes away with this LOA is more than enough reason for a yes vote.

You’re surprised that people like cash?

I am surprised, because they get a 37% haircut on every dollar of that cash.

you don’t like how conservative the CBP is…make your PRAP more aggressive to make up the difference.

But it’s trivially easy to show that, for someone like me with decades to go, you could take a 50% haircut and still come out way ahead compared to having your tax-deferred dollars locked into the CBP with its low equity allocation. Not to mention the fact that you can do other stuff with cash too if you have other priorities in your life.

The fact that I can take more risk elsewhere in my portfolio to make up for the drawbacks of this LOA is nowhere near a good enough reason for me to vote yes.

Because you have to take an equivalent (for many of us) haircut on the RMD or maybe more, it doesn’t take much time to make up the difference given the low performance of the underlying investments in the CBP.

Make your PRAP more agressive... bud they give us 15 options to choose from and the most aggressive is the "total stock market".

The reduced cap on PRAP company contributions is crap for people in the younger years of their career. Currently, I can contribue $10850 of my own money and have 70k of my retirement in the stronger PRAP. If i contribute $10850 now I get $57k into my PRAP and $13k into essentially a bond fund. So make the difference up I need to contribue the $22k or whatever the IRS limit is. So more money out of my pocket to acheive the same thing for a minimal return on investment. At my age I'd rather have the extra $10k in liquidity than put it into a bond fund.

At least the spill into the HRA/AHA is useful to use and it's also tax leveraged.

in our PRAP you can buy any individual equity, far and beyond the target funds.

Don't forget state and local taxes Medicare and Medicare surcharge taxes Union dues... 39.35% - 50% depending on location.

Even then cash over cap is the best situation long term (13000@6% < [email protected]% over 20+ years). Pilot groups should be pushing for abolishing MBCBPs and RHAs.

Short of that, MBCBPs > RHAs for the inheritability aspect.

LOL. OMG the toys these WB Captains have! Can't wait, let's hope it's sooner than later, I'm tired of worrying about the traffic on the 101 knowing my car might overheat. LOL

In Unity...

HRA is tax free. Pre tax money, growth untaxed, and not taxed on withdrawals. I know some of you already have more than the recommended $315,000 needed for medical in retirement but my hunch is most don't.

As far as aggressive options, you do know you can sweep everything into your Schwab PCRA brokerage account and get pretty damn aggressive. You can even trade leveraged stuff. Hell Vanguard doesn't let you do that.

​​​​​​[/s] Yeah, but they won't let me sell naked calls

LOL Well there's that

I’m not in that income bracket yet but isn’t the max HRA spill 10,000$ a year? That would be a lot of years to get to $300,000

That's something that was put in to appease the high earners who wish to limit spill until the MBCBP is in place. It only affects spill from the company for money above the IRS max income set each year. For 2024 the Max income limit was $350k. So after about $403k you get the 17% as PRAP Cash paid in the pay period after it occurred. If you self fund your PRAP you can push more money into the RHA if that's your goal.

Again this is all current and goes away if the LOA passes.

Dont see any positives within this loa except for if you are almost done here. Hurts the youngsters starting out with decades to go. Maybe why the oldest reps voted for it and young ones against.

If you fund the after tax 401K (immediately rolled into Roth) You can get a lot more RHA spill. Another option would be forfeited vacation. I ended up with over 45K HRA spill this year. I’m not super excited about that much since I have Tricare, but I’m trying to get as much Roth money as I can.

There's an option to spill after the 415(c) limit into the PCRA? Would this be taxable cash?