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.