While this is true, it doesn't mean that our payout is less.

Other employee groups have changed (reduced) their participation rate in profit sharing, so, if the company made the exact same total profit in 2016 as they did in 2015, the total dollars spent on profit sharing company wide would drop substantially.

So, comparing the dollars set aside for profit sharing this year versus last year won't give you a direct correlation to our change in profit sharing payout.

 

Hewitt puts the money in conservative Vanguard target funds. The money doesn't grow much (low risk low beta) but both the money you have spill into RHA and the gains are tax free.

I wouldn't recommend spilling much into RHA until your last decade of work and even then one should consider how long they and their spouse will live.

 

12.5% is my prediction

 

We have more pilots now than jan16 so I predict 11%.

 

We all made more; I'm going 10.5%

 

That's not how it works. If we had half the pilots you wouldn't get twice as much.

 

Well in a way, it does.

Company makes x profit and they send a percentage to pilots. Money is divided by pilot wages for the year.

If we have less pilots, the total pilot wages would most likely go down and we would get a little more.

 

one of you is wrong.

 

Respectfully disagree.

As a younger pilot I wouldn't proactively try to max out my RHA spill over by electing post-tax 401k contributions. I also wouldn't do anything to prevent it if my yearly 401k max and PRAP contributions would result in spillover.

Never know if you'll medical out at 50 or find yourself having to work less in the future.

It's a tremendous benefit and I am extremely satisfied with it. Somes pilots buy high and sell low and may underestimate their future healthcare liability.

I want $200-300,000 in it by the time I retire.

 

Funny enough I think they are both right.

1) If you cut the number of pilots in half you do not automatically get double the amount.

2) If there are fewer pilots then you might get more.

BUT . . .

crazy enough you might get more even if there are more pilots


Here's an attempt at an explanation . . .

First lets just say for the sake of this discussion that no matter how many pilots we have, the profit sharing pool is constant, which wouldn't be the case in real life since if there were a dramatic change in pilots that would imply a dramatic change in revenue, but anyways the question is about a few extra pilots on the margin and what impact they have so let's just assume a constant pool.

So the profit sharing pool is $1,000.

In the first example lets say there are 20 pilots. 10 pilots earned $100 and 10 pilots earned $10 in W2 wages. The total W2 pool is 10 * $100 + 10 * $10 = $1100. Each pilot that earned $100 gets $100/$1100 of the pool or 9.09% or $90.90 in profit sharing. Each pilot that earned $10 gets $10/$1100 or .909% or $9.09 each.

10 * $90.90 = $909.00
10* $09.09 = $090.90


Now imagine we add 3 new pilots and retire 2 pilots and the profit sharing pool remains the same at $1000, but this time we have more pilots. Do senior guys get less money because there are more pilots?

Well . . .

First now we have 8 pilots earning $100 and 13 pilots earning $10. The total W2 pool is now 8 * $100 + 13 * $10 = $930. So the senior guys now get $100/$930 or 10.75% or $107.52 and the junior guys get $10/$930 or 1.075% or $10.75.

Magically we have more pilots but everybody got more money!!! How you ask, because the 2 pilots that left were getting about $200 in combined profit sharing and the new guys are only getting about $30 combined so there's $170 more to spread around.

I won't bore you with the details, but if we were to add more high paying pilots the opposite would happen.

Does adding more pilots lower your personal take? It depends, but probably not much if at all.